<PAGE>
As filed with the Securities and Exchange Commission on September 9, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BEA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0394711
(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) Number)
2315 North First Street
San Jose, CA 95131
(408) 570-8000
(Address, including zip code, and telephone number, including area code, of
registrar's principal executive offices)
William T. Coleman III
President, Chief Executive Officer and Chairman
2315 North First Street
San Jose, CA 95131
(408) 570-8000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
Michael C. Phillips, Esq.
Cori M. Allen, Esq.
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, California 94304
(650) 813-5600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities 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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, 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>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER UNIT PRICE FEE (2)
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<S> <C> <C> <C> <C>
4% Convertible Notes due June 15, 2005 $250,000,000 100% $250,000,000 $73,750
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Common Stock, $.001 par value...................... 9,467,450 Shares $ (2) $ (2) $ (2)
=================================================================================================================================
</TABLE>
(1) The amount of shares of Common Stock to be registered hereunder which is to
be sold by certain selling securityholders consists of 9,467,450 shares of
Common Stock issuable upon conversion of the 4% Convertible Notes due June
15, 2005 (the "Notes"). For purposes of estimating the number of shares of
Common Stock to be included in this Registration Statement upon conversion
of the Notes, the Company calculated the number of shares issuable upon
conversion of the Notes based on a conversion rate of 37.8698 shares per
$1,000 principal amount of Notes. In addition to the shares set forth in
the table, in accordance with Rule 416 under the Securities Act of 1933, as
amended, the amount to be registered includes an indeterminate number of
shares issuable upon conversion of the Notes, as such amount may be
adjusted as a result of stock splits, stock dividends and antidilution
provisions.
(2) Pursuant to Rule 457(i) no filing fee is required with respect to the
shares of Common Stock issuable upon conversion of the Notes because no
additional consideration will be received in connection with the exercise
of the conversion privilege.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE AN AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
Subject to Completion, dated September 9, 1998
PROSPECTUS
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BEA Systems, Inc.
$250,000,000 of 4% Convertible Subordinated Notes Due June 15, 2005
9,467,450 SHARES OF COMMON STOCK
This Prospectus relates to the offering for resale by certain selling
securityholders set forth herein (the "Selling Securityholders") of up to an
aggregate of $250,000,000 of 4% Convertible Subordinated Notes due June 15, 2005
(the "Notes") of BEA Systems, Inc., a Delaware corporation ("BEA" or the
"Company") and 9,467,450 shares of Common Stock, par value $.001 per share (the
"Shares") that are issuable upon conversion of the Notes at the conversion rate
of 37.8698 shares per $1,000 principal amount of Notes, subject to adjustment in
certain events. The Notes offered hereby were originally offered by the Company
in a private placement.
The Notes will be convertible at the option of the holder into shares of
Common Stock of the Company at any time on or after September 6, 1998 and prior
to the close of business on the maturity date, unless previously redeemed or
repurchased, at a conversion rate of 37.8698 shares per $1,000 principal amount
of Notes (equivalent to an approximate conversion price of $26.41 per share),
subject to adjustment in certain events. On September 8, 1998, the last reported
bid price of the Company's Common Stock, which is quoted on the Nasdaq National
Market under the symbol "BEAS", was $20.63 per share.
Interest on the Notes is payable on June 15 and December 15 of each year,
commencing on December 15, 1998. The Notes will not be subject to redemption
prior to June 20, 2001, and will be redeemable on and after such date at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice to each Holder, at the redemption prices set forth herein, plus
accrued interest, if any, to the redemption date; provided, however, that the
Notes will not be redeemable during the period beginning on June 20, 2001 and
ending on June 17, 2003 unless the last reported bid price for the Common Stock
is at least 140% of the conversion price for at least 20 trading days within a
period of 30 consecutive trading days ending within five trading days of the
call for redemption. The Notes are not entitled to any sinking fund. The Notes
will mature on June 15, 2005.
In the event of a Change in Control (as defined herein), each holder of Notes
may require the Company to repurchase its Notes, in whole or in part, for cash
or, at the Company's option, Common Stock (valued at 95% of the average closing
bid prices for the five trading days immediately preceding and including the
third trading day prior to the repurchase date) at a repurchase price of 100% of
the principal amount of Notes to be repurchased, plus accrued interest to the
repurchase date.
The Notes are unsecured obligations of the Company, subordinated in right of
payment to all existing and future Senior Indebtedness (as defined herein) of
the Company and effectively subordinated in right of payment to all indebtedness
and other liabilities of the Company's subsidiaries. As of July 31, 1998, the
aggregate amount of outstanding Senior Indebtedness of the Company was
approximately $28.9 million and the Company's subsidiaries had approximately
$21.2 million of indebtedness and other liabilities outstanding (excluding
liabilities of a type not required to be reflected in a balance sheet in
accordance with generally accepted accounting principles and intercompany
liabilities) to which the Notes would have been effectively subordinated. The
Indenture will not restrict the Company or its subsidiaries from incurring
additional Senior Indebtedness or other indebtedness. See "Description of
Notes--Subordination."
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 THE 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.
The Securities offered hereby involve certain risks. See "Risk Factors"
beginning on page 8 of this Prospectus.
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 Selling Securityholders from time to time may offer and sell the Notes
and Shares held by them directly or through agents or broker-dealers on terms to
be determined at the time of sale. To the extent required, the names of any
agent or broker-dealer and applicable commissions or discounts and any other
required information with respect to any particular offer will be set forth in
an accompanying Prospectus Supplement. See "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of Shares by
the Selling Securityholders but has agreed to bear certain expenses of
registration of the Shares under federal and state securities laws.
The Selling Securityholders and any agents or broker-dealers that participate
with the Selling Securityholders in the distribution of Shares may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"), and any commissions received by them and any profit on
the resale of the Shares may be deemed to be underwriting commissions or
discounts under the Securities Act.
The date of this Prospectus is _______________, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Available Information..................................................................... 3
Incorporation of Certain Documents by Reference........................................... 3
The Company............................................................................... 5
Recent Events............................................................................. 6
Use of Proceeds........................................................................... 7
Ratio of Earnings to Fixed Charges........................................................ 7
Risk Factors.............................................................................. 8
Selling Securityholders................................................................... 16
Description of Notes...................................................................... 22
Plan of Distribution...................................................................... 33
Experts................................................................................... 33
Legal Matters............................................................................. 33
</TABLE>
2
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER DESCRIBED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING SECURITYHOLDERS. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE UNDER THIS PROSPECTUS SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR SINCE THE DATE OF ANY DOCUMENTS
INCORPORATED HEREIN BY REFERENCE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES, OR AN OFFER OR SOLICITATION IN ANY STATE TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
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 the Company files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.,
20549, and at the following regional offices of the Commission: Seven World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a
web site (http://www.sec.gov) containing reports, proxy and information
statements and other information of registrants, including the Company, that
file electronically with the Commission. In addition, the Common Stock is
listed on the Nasdaq National Market and similar information concerning the
Company can be inspected and copied at the offices of the National Association
of Securities Dealers, Inc., 9513 Key West Avenue, Rockville, Maryland 20850.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") (of which this Prospectus is a part) under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Shares. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. Statements contained
in this Prospectus as to the contents of any contract or other documents are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference and the
exhibits and schedules thereto. For further information regarding the Company
and the Shares, reference is hereby made to the Registration Statement and such
exhibits and schedules which may be obtained from the Commission at its
principal office in Washington, D.C. upon payment of the fees prescribed by the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the Exchange
Act with the Commission and are incorporated herein by reference:
a. The Company's Annual Report on Form 10-KSB for the year ended January 31,
1998;
b. The Company's Quarterly Report on Form 10-Q for the quarter ended April
30, 1998;
c. The Company's Current Report on Form 8-K dated as of June 30, 1998; and
d. The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A (File No. 000-22369).
3
<PAGE>
Each document filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering made hereby shall be deemed to be incorporated
by reference in this Prospectus and to be part hereof from the date of filing
such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in the applicable Prospectus Supplement) or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered upon written or oral request. Requests should be
directed to Kevin A. Faulkner, Senior Director - Investor Relations, 2315 North
First Street, San Jose, California 95131 telephone number: (408) 570-8000.
4
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THE COMPANY
BEA Systems, Inc. ("BEA" or the "Company") is a leading provider of cross-
platform middleware solutions for enterprise applications. BEA's products and
services enable mission-critical applications to work seamlessly in distributed
computing, Internet, and legacy environments. BEA provides transactional,
messaging, and distributed object-based software for developing and deploying
these enterprise applications. In addition, BEA provides complete enterprise
middleware solutions through its partner network, and a full range of services
including consulting, training and support. The flagship of the BEA enterprise
middleware solution is BEA TUXEDO, a software platform that manages transactions
and communications for enterprise-wide applications, enabling organizations to
realize the benefits offered by distributed computing environments while
preserving the traditional advantages of mainframe-based systems. BEA products
provide a middleware software infrastructure that supports thousands of
simultaneous users distributed worldwide.
BEA's products are marketed and sold by the Company's direct sales force
through a network of 51 offices in 24 countries worldwide and also indirectly by
its distribution partners. BEA's products have been adopted by customers in a
wide variety of industries, including telecommunications, banking and finance,
manufacturing, retail, technology and transportation. The total number of
customers using the Company's products is approximately 1,400 worldwide. These
customers include: The AT&T Corp., Bell Communications Research, Inc., The
Boeing Company, Deutsche Telekom, Federal Express Corp., Fidelity Investments,
The Gap, Inc., McKesson Corp., Motorola, Inc., Nippon Telephone & Telegraph,
Norwest Corporation, United Airlines, Inc., U.K. Employment Services, Union
Pacific Railroad and Walgreen Co. In addition, the Company partners with
independent software vendors ("ISVs") such as PeopleSoft, Inc. and Clarify, Inc.
and computer hardware manufacturers such as Hewlett-Packard, IBM and Unisys to
sell BEA products to enterprise customers.
Over the past decade, the information systems of many organizations have been
evolving from traditional mainframe systems to distributed computing
environments. This evolution has been driven by the benefits offered by
distributed computing, including lower incremental technology costs, faster
application development and deployment, increased flexibility and improved
access to business information. However, the inherent technical and business
limitations of distributed computing have generally precluded its use for
complex, large-scale, mission-critical applications, such as airline
reservations, credit card processing and customer billing and support systems,
that enable and support fundamental business processes. These shortcomings
include the limited scalability, reliability and interoperability of distributed
computing environments. In addition, it has been difficult to integrate
distributed computing technologies with existing mission-critical applications,
limiting organizations' ability to leverage their substantial investments in
legacy systems and existing personnel and skills.
BEA's products and services enable companies to overcome the limitations of
distributed computing for mission-critical applications. The Company's
enterprise middleware solutions, featuring time-tested and market-proven BEA
TUXEDO technology, provide a middleware platform that addresses the scalability,
manageability, platform independence, interoperability, integrity, reliability
and security requirements of complex, large-scale, distributed computing in the
heterogeneous environments present in most major organizations. The BEA solution
allows companies to leverage their substantial investments in legacy systems,
significantly extending the useful lives of mainframe and programmer assets
while exploiting the benefits offered by distributed computing. The Company also
offers solutions that enable customers to quickly develop secure, reliable
applications on the Internet that interoperate with new and existing systems.
The Company's objective is to establish its middleware solutions as the
industry standard for developing, deploying and managing distributed mission-
critical applications. To this end, BEA intends to enhance its technological
leadership by adding new functionality to its products; expand its global
distribution facilities to complement its direct sales, services, training and
support capabilities; promote the embedding of BEA products into the product
offerings of ISVs to accelerate the acceptance of BEA products; leverage
strategic partnerships to augment the efforts of its direct sales force; and
provide the software and services necessary to conduct safe, reliable enterprise
transactions over the Internet.
From its inception, the Company has made a number of strategic acquisitions.
The Company acquired worldwide exclusive rights to TUXEDO from Novell, Inc.
("Novell") in February 1996, acquired Information Management Company ("IMC") and
Independence Technologies, Inc. ("ITI"), two leading distributors of TUXEDO, in
September 1995 and November 1995, respectively, and acquired a number of other
TUXEDO distribution, sales and support organizations between May 1996 and
December 1996. In March 1997, the Company acquired exclusive rights to MessageQ,
5
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ObjectBroker and other related products from Digital Equipment Corporation
("Digital"). See Note 4 of Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-KSB. In the quarter ended January 31, 1998,
the Company acquired a business unit of Nocom Nordic Communications AB
("Nocom"), and in the quarter ended April 30, 1998, the Company acquired a
business unit of Penta Systems Technology, Inc. ("Penta"). In April 1998, the
Company acquired the Leader Group, Inc. ("Leader Group"), a Denver-based
consulting services firm. Most recently, on June 16, 1998, the Company purchased
the TOP END enterprise middleware technology and product family ("TOP END") from
NCR Corporation ("NCR") and, on July 20, 1998 acquired Entersoft a New Jersey
based consulting services firm. See "Risk Factors--Past and Future Acquisitions;
Risks Associated with TOP END Acquisition."
The Company was incorporated in Delaware in January 1995 under the name BEA
Enterprises, Inc. and changed its name to BEA Systems, Inc. in September 1995.
References herein to "BEA" or the "Company" refer to BEA Systems, Inc., its
subsidiaries and predecessor entities acquired in previous acquisitions. The
Company's headquarters are located at 2315 North First Street, San Jose,
California 95131, and its telephone number is (408) 570-8000.
RECENT EVENTS
ACQUISITION OF TOP END
On June 16, 1998, the Company completed an Asset Purchase Agreement (the
"Asset Purchase Agreement") with NCR under which the Company purchased the TOP
END enterprise middleware technology and product family (the "Acquisition") from
NCR for approximately $93.4 million in cash. TOP END coordinates and connects
end users to the databases they are accessing, often spanning multiple computer
networks and hardware in different geographic locations. The Company expects the
Acquisition to strengthen the range of open, robust middleware solutions offered
by BEA. The Company also believes that the addition of TOP END to BEA's
middleware product family will enable the Company to better meet the needs of
customers for comprehensive, scalable enterprise middleware solutions.
CONVERTIBLE SUBORDINATED DEBT OFFERING
On June 12, 1998, the Company completed the sale of $200 million of 4%
Convertible Subordinated Notes due June 15, 2005 in an offering to qualified
institutional investors, which notes comprise $200 million of the Notes. The
Company granted the initial purchasers a 30-day option to purchase an additional
$50 million of 4% Convertible Subordinated Notes to cover overallotments, which
option was exercised in full in a transaction completed on July 7, 1998 and
which notes comprise the remaining $50 million of the Notes. The net proceeds
of the offering by the Company of the Notes have been added to working capital
and will be used for general corporate purposes of which $94 million was used
to complete the acquisition of TOP END. See "Risk Factors Significant
Leverage; Debt Service."
ACQUISITION OF LEADER GROUP
In April 1998, BEA acquired the Leader Group, Inc. ("Leader Group"),
a Denver-based corporation specializing in consulting services for the
development, deployment and delivery of mission-critical distributed object
software applications, in a stock-for-stock merger (the "Merger"). In the
Merger, BEA issued 560,704 shares of its common stock in exchange for all of the
outstanding stock of Leader Group. Based on the market price of BEA stock at the
closing date, the Merger was valued at approximately $14.5 million, and BEA
accounted for the Merger using the pooling of interests method.
The BEA shares issued in the Merger were issued in a private placement exempt
from registration under the Securities Act of 1993, as amended. As a part of
the Merger agreement, the Company agreed to file a registration statement to
register the BEA shares issued in the Merger.
6
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USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of Shares by
the Selling Securityholders, but has agreed to bear certain expenses of
registration of the Notes and Common Stock offered hereby (the "Securities")
under federal and state securities laws.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for each of the periods
indicated is as follows (in thousands):
<TABLE>
<CAPTION>
Three months ended Fiscal years ended
April 30, January 31,
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1998 1997 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net earnings (loss) $1,572 $(20,069) $(18,149) $(86,916) $(17,680)
Fixed charges:
Interest expenses 1,296 1,965 6,054 6,727 89
Portion of rent expense deemed to represent
interest factor 512 344 1,958 1,125 83
Interest expense - 268 268 880 58
------ -------- -------- -------- --------
Total fixed charges 1,808 2,577 8,280 8,732 230
------ -------- -------- -------- --------
Net earnings (loss) before fixed charges $3,380 $(17,492) $ (9,869) $(78,184) $(17,450)
====== ======== ======== ======== ========
Ratio of net earnings (loss) before fixed
charges to fixed charges 1.87:1 (6.79):1 (1.19):1 (8.95):1 (75.76):1
====== ======== ======== ======== ========
Deficiency of net earnings to cover
fixed charges N/A $ 20,069 $18,149 $86,916 $ 17,680
====== ======== ======== ======== ========
</TABLE>
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RISK FACTORS
In addition to the other information contained in this Prospectus, investors
should carefully consider the following risk factors in evaluating an investment
in the Common Stock offered hereby. This Prospectus includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. All statements other than statements of historical fact
are "forward-looking statements" for purposes of these provisions, including any
projections of earnings, revenues or other financial items, any statements of
the plans and objectives of management for future operations, any statements
concerning proposed new products or services, any statements regarding future
economic conditions or performance, and any statement of assumptions underlying
any of the foregoing. In some cases, forward-looking statements can be
identified by the use of terminology such as "may," "will," "expects," "plans,"
"anticipates," "estimates," "potential," or "continue," or the negative thereof
or other comparable terminology. Although the Company believes that the
expectations reflected in the forward-looking statements contained herein are
reasonable, there can be no assurance that such expectations or any of the
forward-looking statements will prove to be correct, and actual results could
differ materially from these projected or assumed in the forward-looking
statements. The Company's future financial condition and results of operations,
as well as any forward-looking statements, are subject to inherent risks and
uncertainties, including but not limited to the risk factors set forth below and
for the reasons described elsewhere in this Prospectus. All forward-looking
statements and reasons why results may differ included in this Prospectus are
made as of the date hereof, and the Company assumes no obligation to update any
such forward-looking statement or reason why actual results might differ.
LIMITED OPERATING HISTORY; INTEGRATION OF ACQUISITIONS; NO ASSURANCE OF
PROFITABILITY
The Company was incorporated in January 1995 and, accordingly, has a limited
operating history upon which an evaluation of the Company and its prospects can
be based. Revenues generated by the Company to date have been derived primarily
from sales of BEA TUXEDO, a product to which the Company acquired worldwide
rights in February 1996, and from fees for related services. Since its
inception, the Company has acquired a number of businesses, technologies and
products. Prior to the consummation of these acquisitions, the Company had no
revenues and limited business activities. Accordingly, the Company is subject to
the risks inherent both in the operation of a business with a limited operative
history and the integration of a number of separate and independent business
operations and there can be no assurance that the Company will be able to
address these risks successfully. At July 31, 1998, the Company had an
accumulated deficit of approximately $165.3 million. In addition, in connection
with certain acquisitions completed prior to July 31, 1998, the Company recorded
approximately $234.2 million as intangible assets, approximately $158.7 million
of which has already been amortized and approximately $75.5 million of which is
expected to be amortized in future periods through the Company's fiscal year
ending January 31, 2004. The amount of such intangible assets to be expensed to
cost of revenues and general and administrative expense in future periods, for
intangible assets acquired prior to July 31, 1998. The amount of such intangible
assets to be expensed to cost of revenues, to research and development and to
general and administrative expense in future periods, for intangible assets
acquired prior to July 31, 1998, is expected to be $26.0 million and $30.8
million in the fiscal years ending January 31, 1999 and 2000, respectively. To
the extent the Company makes additional acquisitions of businesses, products and
technologies in the future, the Company may report additional, potentially
significant, expenses related thereto. To the extent future events result in the
impairment of any capitalized intangible assets, amortization expenses may occur
sooner than the Company expects. For the foregoing reasons, there can be no
assurance that the Company will be profitable in any future period and recent
operating results should not be considered indicative of future financial
performance.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company expects that it will experience significant fluctuations in future
quarterly operating results as a result of many factors, including, among
others: the size and timing of customer orders, introduction or enhancement of
products by the Company or its competitors, market acceptance of middleware
products, the lengthy sales cycle for the Company's
8
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products, technological changes in computer systems and environments, the
structure and timing of future acquisitions of businesses, products and
technologies, including the acquisition of the TOP END enterprise middleware
technology and product family from NCR, the impact and duration of deteriorating
economic and political conditions in Asia and related declines in Asian currency
values, general economic conditions which can affect customers' capital
investment levels, the ability of the Company to develop, introduce and market
new products on a timely basis, changes in the Company's or its competitors'
pricing policies, customer order deferrals in anticipation of future new
products and product enhancements, the Company's success in expanding its sales
and marketing programs, mix of products and services sold, mix of distribution
channels, ability to meet the service requirements of its customers, costs
associated with acquisitions, including the acquisition of the TOP END
enterprise middleware technology and product family from NCR, the terms and
timing of financing activities, loss of key personnel and fluctuations in other
foreign currency exchange rates and interpretations of the recently introduced
statement of position on software revenue recognition. As a result of all of
these factors, the Company believes that quarterly revenues and operating
results are difficult to forecast and period-to-period comparisons of its
results of operations are not necessarily meaningful and should not be relied
upon as indications of future performance.
A portion of the Company's revenues are derived from large orders as customers
deploy BEA products throughout their organizations. As the revenue size of
individual license transactions increases, the risk of fluctuation in future
quarterly results can also be expected to increase. Any inability of the
Company to generate large customer orders, or any delay or loss of such orders
in a particular quarter, will have a material adverse effect on the Company's
revenues and, more significantly on a percentage basis, its net income or loss
in that quarter. Moreover, the Company typically receives and fulfills a
majority of its orders within the quarter, with a substantial portion occurring
in the last month of a fiscal quarter. As a result, the Company may not learn
of revenue shortfalls until late in a fiscal quarter. Additionally, the
Company's operating expenses are based in part on its expectations for future
revenue and are relatively fixed in the short term. Any revenue shortfall below
expectations could have an immediate and significant adverse effect on the
results of operations.
As is common in the software industry, the Company believes that its fourth
quarter orders are favorably impacted by a variety of factors including year-end
capital purchases by larger corporate customers and sales incentive programs.
This increase typically results in first quarter customer orders being lower
than orders received in the immediately preceding fourth quarter. The Company
anticipates that this seasonal impact is likely to increase as it continues to
focus on large corporate accounts.
Similarly, shortfalls in BEA's revenues and earnings from levels expected by
securities analysts could have an immediate and significant adverse effect on
the trading price of the Company's Common Stock. Moreover, the Company's stock
price is subject to the volatility generally associated with software and
technology stocks and may also be affected by broader market trends unrelated to
the Company's performance.
PAST AND FUTURE ACQUISITIONS; RISKS ASSOCIATED WITH TOP END ACQUISITION
From its inception in January 1995, the Company has made a number of strategic
acquisitions. Integration of acquired companies, divisions and products involves
the assimilation of potentially conflicting operations and products, which
divert the attention of the Company's management team and may have a material
adverse effect on the Company's operating results in future quarters. In
addition, in connection with certain of its acquisitions, the Company is
required to make certain future payments. Any failure to make such payments or
otherwise perform continuing obligations relative to these acquisitions would
result in the loss of certain of its rights in the acquired businesses or
products and would have a material adverse effect on the Company's business,
operating results and financial condition. Most recently, the Company acquired
Leader Group and Penta in the quarter ended April 30, 1998 and has most recently
completed the TOP END acquisition (discussed below) in June 1998. The Company
intends to make additional acquisitions in the future, although there can be no
assurance that suitable companies, divisions or products will be available for
acquisition. Such acquisitions entail numerous risks, including an inability to
successfully assimilate acquired operations and products, an inability to retain
key employees of the acquired operations, diversion of management's attention,
and difficulties and uncertainties in transitioning the key business
relationships from the acquired entity to the Company. In addition, future
acquisitions by the Company may result in the issuance of dilutive securities,
the assumption or incurrence of debt obligations, large one-time expenses and
the acquisition of intangible assets that result in significant future
amortization expense. These factors could have a material adverse effect on the
Company's business, operating results and financial condition.
9
<PAGE>
The recently-completed TOP END acquisition is subject to a number of risks
that could adversely affect the Company's ability to achieve the anticipated
benefits of the TOP END acquisition. These risks may be exacerbated by the fact
that the TOP END operations and personnel are located in San Diego, California,
where the Company did not previously have any material operations. The need to
focus management's attention on establishing relationships with, and procedures
for communicating with, TOP END employees may reduce the ability of the Company
to successfully pursue other opportunities for a period of time. Any departure
of key TOP END employees or significant numbers of other TOP END employees could
have a material adverse effect on the Company. The Company may face difficulties
in retaining TOP END customers, and customers' uncertainties as to the Company's
plans and abilities to support both the TOP END products and BEA TUXEDO after
the acquisition could adversely affect the Company's ability to retain these
customers, which could have a material adverse effect on the Company. The TOP
END acquisition will result in a write-off related to in-process research and
development and substantial ongoing amortization expenses, which will have a
negative impact on the Company's future operating results. See ``Recent
Events.''
PRODUCT CONCENTRATION
The Company currently derives the majority of its license and service revenues
from BEA TUXEDO and from related products and services. These products and
services are expected to continue to account for the majority of the Company's
revenues for the foreseeable future. As a result, factors adversely affecting
the pricing of or demand for BEA TUXEDO, such as competition, product
performance or technological change, could have a material adverse effect on the
Company's business and consolidated results of operations and financial
condition.
LENGTHY SALES CYCLE
The Company's products are typically used to integrate large, sophisticated
applications that are critical to a customer's business and the purchase of the
Company's products is often part of a customer's implementation of a distributed
computing environment. Customers evaluating the Company's software products face
complex decisions regarding alternative approaches to the integration of
enterprise applications, competitive product offerings, rapidly changing
software technologies and limited internal resources due to other information
systems requirements. For these and other reasons, the sales cycle for the
Company's products is lengthy and is subject to delays or cancellation over
which the Company has little or no control. To the extent the revenue size of
license transactions increases, customer evaluations and procurement processes
are expected to lengthen the overall sales cycle. The Company believes its
sales cycles can be affected by general economic conditions which impact
customers' capital investment decisions. Any significant change in the Company's
sales cycle could have a material adverse effect on the Company's business,
results of operations and financial condition.
Although the Company has a standard license agreement which meets the revenue
recognition criteria under current generally accepted accounting principles, the
Company must often negotiate and revise terms and conditions of this standard
agreement, particularly in larger sales transactions. Negotiation of mutually
acceptable language can extend the sales cycle and in certain situations, may
require the Company to defer recognition of revenue on the sale. In addition,
while the recently issued Statement of Position (SOP) 97-2, Software Revenue
Recognition (as amended by SOP 98-4), is not expected to have a material impact
on the Company's revenues and earnings, detailed implementation guidance of
these standards has not yet been issued. Once issued, such guidance could lead
to unanticipated changes in the Company's current revenue recognition practices
and have an adverse impact on revenues and earnings. In the event that
implementation guidance is different, the Company believes that it can adapt its
current business practice to comply with this guidance; however, there can be no
assurances that this will be the case.
COMPETITION
The market for middleware software and related services is highly competitive.
The Company's competitors are diverse and offer a variety of solutions directed
at various segments of the middleware software marketplace. These competitors
include system and database vendors such as IBM and database vendors such as
Oracle, which offer their own middleware functionality for use with their
proprietary systems. Microsoft has released a product that includes certain
middleware functionality and has demonstrated and announced that it intends to
include this functionality in future versions of its
10
<PAGE>
Windows NT operating system. In addition, there are companies offering and
developing middleware and integration software products and related services
that directly compete with products offered by the Company. Further, the
software development tool vendors typically emphasize the broad versatility of
their toolsets and, in some cases, offer complementary middleware software that
supports these tools and performs messaging and other basic middleware
functions. Last, internal development groups within prospective customers'
organizations may develop software and hardware systems that may substitute for
those offered by the Company. A number of the Company's competitors and
potential competitors have longer operating histories, significantly greater
financial, technical, marketing and other resources, greater name recognition
and a larger installed base of customers than the Company.
The Company's principal competitors currently include hardware vendors who
bundle their own middleware software products with their computer systems and
database vendors that advocate client/server networks driven by the database
server. IBM is the primary hardware vendor who offers a line of middleware and
database solutions for its customers. The bundling of middleware functionality
in IBM proprietary hardware and database systems requires the Company to compete
with IBM in its installed base, where IBM has certain inherent advantages due to
its significantly greater financial, technical, marketing and other resources,
greater name recognition and the integration of its enterprise middleware
functionality with its proprietary hardware and database systems. The Company
needs to differentiate its products based on functionality, interoperability
with non-IBM systems, performance and reliability and establish its products as
more effective solutions to customers' needs. Oracle is the primary relational
database vendor offering products that are intended to serve as alternatives to
the Company's enterprise middleware solutions. There can be no assurance that
the Company will compete successfully with hardware, database, or other vendors,
or that the products offered by such vendors will not achieve greater market
acceptance than the Company's products.
Microsoft has demonstrated certain middleware functionality and announced that
it intends to include this functionality in future versions of its Windows NT
operating system. Microsoft has also introduced a product that includes certain
middleware functionality. The bundling of middleware functionality in Windows
NT will require the Company to compete with Microsoft in the Windows NT
marketplace, where Microsoft will have certain inherent advantages due to its
significantly greater financial, technical, marketing and other resources,
greater name recognition, its substantial installed base and the integration of
its middleware functionality with Windows NT. If Microsoft successfully
incorporates middleware software products into Windows NT or separately offers
middleware applications, the Company will need to differentiate its products
based on functionality, interoperability with non-Microsoft platforms,
performance and reliability and establish its products as more effective
solutions to customers' needs. There can be no assurance that the Company will
be able to successfully differentiate its products from those offered by
Microsoft, or that Microsoft's entry into the middleware market will not
materially adversely affect the Company's business, operating results and
financial condition.
In addition, current and potential competitors may make strategic acquisitions
or establish cooperative relationships among themselves or with third parties,
thereby increasing the ability of their products to address the needs of the
Company's current and prospective customers. Accordingly, it is possible that
new competitors or alliances among current and new competitors may emerge and
rapidly gain significant market share. Such competition could materially
adversely affect the Company's ability to sell additional software licenses and
maintenance, consulting and support services on terms favorable to the Company.
Further, competitive pressures could require the Company to reduce the price of
its products and related services, which could materially adversely affect the
Company's business, operating results and financial condition. There can be no
assurance that the Company will be able to compete successfully against current
and future competitors and the failure to do so would have a material adverse
effect upon the Company's business, operating results and financial condition.
INTERNATIONAL OPERATIONS
International revenues accounted for 42 percent and 46 percent of consolidated
revenues in the quarter ended July 31, 1998 and the quarter ended July 31,
1997, respectively. The Company sells its products and services through a
network of branches and subsidiaries located in 24 countries worldwide. In
addition, the Company also markets through distributors in Europe and the
Asia/Pacific region. Management believes that its success depends upon continued
expansion of its international operations. The Company's international business
is subject to a number of risks, including unexpected changes in regulatory
practices and tariffs, greater difficulties in staffing and managing foreign
operations, longer collection cycles, seasonality, potential changes in tax
laws, greater difficulty in protecting intellectual property and the impact of
fluctuating exchange rates between the US dollar and foreign currencies in
markets where BEA does business, in particular the French franc, the German
mark, the British pound, the Japanese yen, the Australian dollar and the Korean
11
<PAGE>
won. The Company's international revenues may also be impacted by general
economic and political conditions in these foreign markets. Since the late
summer of 1997, a number of Pacific Rim countries have experienced economic,
banking and currency difficulties that have led to economic downturns in those
countries. Among other things, the decline in value of Asian currencies,
together with difficulties obtaining credit, has resulted in a decline in the
purchasing power of the Company's Asian customers, which in turn has resulted in
the delay of orders for the Company's products from certain Asian customers and
is likely to result in further delays and, possibly the cancellation, of such
orders. As a result of such delays, the Company's revenues from Asia for the
quarter ended July 31, 1998 comprised a lower percentage of total revenues than
the Company has historically experienced. The Company anticipates that its
financial results will continue to be adversely impacted by the weak Asian
economic conditions. The extent of the future impact of these conditions is
difficult to predict. There can be no assurances that these factors and other
factors will not have a material adverse effect on the Company's future
international revenues and consequently on the Company's business and
consolidated financial condition and results of operations.
MANAGEMENT OF GROWTH
The Company currently is continuing to experience a period of rapid and
substantial growth that has placed, and is expected to continue to place, a
strain on the Company's administrative and operational infrastructure. The
number of Company employees has increased from 120 employees in three offices in
the United States at January 31, 1996 to over 1,100 employees in 51 offices in
24 countries at July 31, 1998. The Company's ability to manage its staff and
growth effectively will require continued improvement in its operational,
financial and management controls, reporting systems and procedures. In this
regard, the Company is currently updating its management information systems to
integrate financial and other reporting among the Company's multiple domestic
and foreign offices. In addition, the Company intends to continue to increase
its staff worldwide and to continue to improve financial reporting and controls
for the Company's global operations. There can be no assurance that the Company
will be able to successfully implement improvements to its management
information and control systems in an efficient or timely manner or that, during
the course of this implementation, deficiencies in existing systems and controls
will be discovered. If management of the Company is unable to manage growth
effectively, the Company's business, results of operations and financial
condition will be materially adversely affected.
DEPENDENCE ON GROWTH OF MARKET FOR MIDDLEWARE
The middleware market, in which the Company conducts its business, is emerging
and is characterized by continuing technological developments, evolving industry
standards and changing customer requirements. BEA's success is dependent in
large part on the Company's middleware software products' achieving market
acceptance by large customers with substantial legacy mainframe systems. The
Company's future financial performance will depend in large part on continued
growth in the number of companies extending their mainframe-based, mission-
critical applications to an enterprise-wide distributed computing environment
through the use of middleware technology. There can be no assurance that the
market for middleware technology and related services will continue to grow. If
the middleware market fails to grow or grows more slowly than the Company
currently anticipates, or if the Company experiences increased competition in
this market, the Company's business, results of operations and financial
condition will be adversely affected.
DEPENDENCE ON KEY PERSONNEL AND NEED TO HIRE ADDITIONAL PERSONNEL
The Company believes its future success will depend upon its ability to
attract and retain highly skilled personnel including the Company's founders,
Messrs. William T. Coleman III, Edward W. Scott, Jr., Alfred S. Chuang and key
members of management. Competition for such personnel is intense and there can
be no assurance that the Company will be able to retain its key employees or
that it will be successful in attracting, assimilating and retaining them in the
future. As the Company seeks to expand its global organization, the hiring of
qualified sales, technical and support personnel will be difficult due to the
limited number of qualified professionals. Failure to attract, assimilate and
retain key personnel would have a material adverse effect on the Company's
business, results of operations and financial condition.
EXPANDING DISTRIBUTION CHANNELS AND RELIANCE ON THIRD PARTIES
To date, the Company has sold its products principally through its direct
sales force, as well as through indirect sales channels, such as ISVs, hardware
OEMs, systems integrators, independent consultants and distributors. The
Company's ability to achieve significant revenue growth in the future will
depend in large part on its success in expanding its direct
12
<PAGE>
sales force and in further establishing and maintaining relationships with
distributors, ISVs and OEMs. In particular, a significant element of the
Company's strategy is to embed its technology in products offered by the
Company's ISV customers. The Company intends to seek distribution arrangements
with other ISVs to embed the Company's technology in their products and expects
that these arrangements will account for a significant portion of the Company's
revenues in future periods. There can be no assurance that the Company will be
able to successfully expand its direct sales force or other distribution
channels, secure license agreements with additional ISVs on commercially
reasonable terms or at all, or otherwise further develop its relationships with
distributors and ISVs, or that any such expansion or additional license
agreements would result in an increase in revenues. Although the Company
believes that its investments in the expansion of its direct sales force and in
the establishment of other distribution channels through third parties
ultimately will improve the Company's operating results, to the extent that such
investments are made and revenues do not correspondingly increase, the Company's
business, results of operations and financial condition will be materially and
adversely affected.
The Company relies on informal relationships with a number of consulting and
systems integration firms to enhance its sales, support, service and marketing
efforts, particularly with respect to implementation and support of its products
as well as lead generation and assistance in the sale process. The Company will
need to expand its relationships with third parties in order to support license
revenue growth. Many such firms have similar, and often more established,
relationships with the Company's principal competitors. There can be no
assurance that these and other third parties will provide the level and quality
of service required to meet the needs of the Company's customers, that the
Company will be able to maintain an effective, long term relationship with such
third parties, or that such third parties will continue to meet the needs of the
Company's customers.
RAPID TECHNOLOGY CHANGE; DEPENDENCE ON NEW PRODUCTS AND PRODUCT ENHANCEMENTS
The market for the Company's products is highly fragmented, competitive with
alternative computing architectures and characterized by continuing
technological development, evolving industry standards and changing customer
requirements. The introduction of products embodying new technologies, the
emergence of new industry standards or changes in customer requirements could
render the Company's existing products obsolete and unmarketable. As a result,
the Company's success depends upon its ability to enhance existing products,
respond to changing customer requirements and develop and introduce in a timely
manner new products that keep pace with technological developments and emerging
industry standards. There can be no assurance that the Company's products will
adequately address the changing needs of the marketplace or that the Company
will be successful in developing and marketing enhancements to its existing
products or products incorporating new technology on a timely basis. Failure to
develop and introduce new products, or enhancements to existing products, in a
timely manner in response to changing market conditions or customer
requirements, will materially and adversely affect the Company's business,
results of operations and financial condition.
RISK OF SOFTWARE DEFECTS
The software products offered by the Company are internally complex and,
despite extensive testing and quality control, may contain errors or defects,
especially when first introduced. Such defects or errors could result in
corrective releases for the Company's software products, damage to the Company's
reputation, loss of revenue, product returns or order cancellations, or lack of
market acceptance of its products, any of which could have a material and
adverse effect on the Company's business, results of operations and financial
condition.
The Company's license agreements with its customers typically contain
provisions designed to limit the Company's exposure to potential product
liability claims. It is possible, however, that the limitation of liability
provisions contained in the Company's license agreements may not be effective as
a result of existing or future federal, state or local laws or ordinances or
unfavorable judicial decisions. Although the Company has not experienced any
product liability claims to date, the sale and support of its products may
entail the risk of such claims, which could be substantial in light of the use
of such products in mission-critical applications. A successful product
liability claim brought against the Company could have a material adverse effect
on the Company's business, results of operations and financial condition.
DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISK OF INFRINGEMENT
The Company's success depends upon its proprietary technology. The Company
relies on a combination of patent, copyright, trademark and trade secret rights,
confidentiality procedures and licensing arrangements to establish and protect
13
<PAGE>
its proprietary rights. No assurance can be given that competitors will not
successfully challenge the validity or scope of the Company's patents or that
such patents will provide a competitive advantage to the Company.
As part of its confidentiality procedures, the Company generally enters into
non-disclosure agreements with its employees, distributors and corporate
partners and into license agreements with respect to its software, documentation
and other proprietary information. Despite these precautions, it may be
possible for a third party to copy or otherwise obtain and use the Company's
products or technology without authorization, or to develop similar technology
independently. In particular, the Company has, in the past, provided certain
hardware OEMs with access to its source code and any unauthorized publication or
proliferation of this source code could materially adversely affect the
Company's business, operating results and financial condition. Policing
unauthorized use of the Company's products is difficult, and although the
Company is unable to determine the extent to which piracy of its software
products exists, software piracy can be expected to be a persistent problem.
Effective protection of intellectual property rights is unavailable or limited
in certain foreign countries. There can be no assurance that the Company's
protection of its proprietary rights will be adequate or that the Company's
competitors will not independently develop similar technology, duplicate the
Company's products or design around any patents issued to the Company or other
intellectual property rights of the Company.
The Company does not believe that any of its products infringe the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not claim such infringement by the Company with respect to current or
future products. Any such claims, with or without merit, could result in costly
litigation that could absorb significant management time, which could have a
material adverse effect on the Company's business, operating results and
financial condition. Such claims might require the Company to enter into
royalty or license agreements. Such royalty or license agreements, if required,
may not be available on terms acceptable to the Company or at all, which could
have a material adverse effect upon the Company's business, operating results
and financial condition.
CONTROL BY MANAGEMENT AND CURRENT STOCKHOLDERS
As of July 31, 1998, the Company's officers and directors and their
affiliates, in the aggregate, had voting control over approximately 62 percent
of the Company's voting Common Stock. In particular, Warburg, Pincus Ventures,
L.P. ("Warburg") had voting control over approximately 49 percent of the
Company's voting Common Stock and beneficially owned approximately 63 percent of
the Company's Common Stock (which includes the non-voting Class B Common Stock
owned by Warburg). As a result, these stockholders will be able to control all
matters requiring stockholder approval, including the election of directors and
approval of significant corporate transactions. The voting power of Warburg
combined with the Company's officers and directors under certain circumstances
could have the effect of delaying or preventing a change in control of the
Company.
SIGNIFICANT LEVERAGE; DEBT SERVICE
In connection with the sale of 4% Convertible Subordinated Notes, the Company
incurred $250 million in long-term indebtedness. As a result of this
indebtedness, the Company's principal and interest payment obligations will
increase substantially. The degree to which the Company will be leveraged could
materially and adversely affect the Company's ability to obtain financing for
working capital, acquisitions or other purposes and could make it more
vulnerable to industry downturns and competitive pressures. The Company's
ability to meet its debt service obligations will be dependent upon the
Company's future performance, which will be subject to financial, business and
other factors affecting the operations of the Company, many of which are beyond
its control.
The Company will require substantial amounts of cash to fund scheduled
payments of interest on the Notes, payment of the principal amount of the Notes,
payment of principal and interest on the Company's other indebtedness, future
capital expenditures and any increased working capital requirements. If the
Company is unable to meet its cash requirements out of cash flow from
operations, there can be no assurance that it will be able to obtain alternative
financing. In the absence of such financing, the Company's ability to respond
to changing business and economic conditions, to make future acquisitions, to
absorb adverse operating results or to fund capital expenditures or increased
working capital requirements may be adversely affected. If the Company does not
generate sufficient increases in cash flow from operations to repay the Notes at
maturity, it could attempt to refinance the Notes; however, no assurance can be
given that such a refinancing would be available on terms acceptable to the
Company, if at all. Any failure by the Company to satisfy its obligations
14
<PAGE>
with respect to the Notes at maturity (with respect to payments of principal) or
prior thereto (with respect to payments of interest or required repurchases)
would constitute a default under the Indenture and could cause a default under
agreements governing other indebtedness, if any, of the Company.
15
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth certain information regarding the offer and
sale of the Securities by the Selling Securityholders and is based on
information provided to the Company by the Selling Securityholders.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially Owned After
Owned Prior to Offering(1) Completion of Offering(1)(3)
---------------------------- -------------------------------
Percentage Shares Percentage
Selling Securityholders Number of Class(2) Offered Number of Class(2)
- -------------------------------- ------------- -------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Goldman, Sachs & Co. 708,165 1.0% 708,165 **
$18,700,000* 7.5% $18,700,000* 0 **
CFW-C, L.P. 397,632 ** 397,632 **
$10,500,000* 4.2% $10,500,000* 0 **
IDS Life Aggressive Growth Fund 678,698 1.0% 378,698 300,000 **
$10,000,000* 4.0% $10,000,000* **
BNP Arbitrage SNC 337,987 ** 337,987 **
$ 8,925,000* 3.6% $ 8,925,000* 0 **
Mainstay Convertible Fund 322,840 ** 322,840 **
$ 8,525,000* 3.4% $ 8,525,000* 0 **
Alexandra Global Investment 302,958 ** 302,958 **
Fund 1 Ltd. $ 8,000,000* 3.2% $ 8,000,000* 0 **
Tribech Investments, LLC 302,958 ** 302,958 **
$ 8,000,000* 3.2% $ 8,000,000* 0 **
Fidelity Financial Trust: 284,023 ** 284,023 **
Fidelity Convertible
Securities Fund $ 7,500,000* 3.0% $ 7,500,000* 0 **
Deutsche Bank Securities Inc. 252,780 ** 252,780 **
$ 6,675,000* 2.7% $ 6,675,000* 0 **
Argent Classic Convertible 246,153 ** 246,153 **
Arbitrage Fund (Bermuda) L.P. $ 6,500,000* 2.6% $ 6,500,000* 0 **
Highbridge Capital Corporation 246,153 ** 246,153 **
$ 6,500,000* 2.6% $ 6,500,000* 0 **
Delta Airlines Inc. Retirement 242,366 ** 242,366 **
Plan $ 6,400,000* 2.6% $ 6,400,000* 0 **
CA Public Employee's Retirement 208,283 ** 208,283 **
System $ 5,500,000* 2.2% $ 5,500,000* 0 **
State of Connecticut Combined 191,053 ** 191,053 **
Investment Funds $ 5,045,000* 2.0% $ 5,045,000* 0 **
The Travelers Indemnity Company 183,971 ** 183,971 **
$ 4,858,000* 1.9% $ 4,858,000* 0 **
Chase Manhattan NA, Trustee for
IBM Retirement Plan dated 175,526 ** 175,526 **
12/18/45 $ 4,635,000* 1.9% $ 4,635,000* 0 **
Argent Classic Convertible 170,414 ** 170,414 **
Arbitrage Fund L.P. $ 4,500,000* 1.8% $ 4,500,000* 0 **
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially Owned After
Owned Prior To Offering(1) Completion Of Offering(1)(3)
---------------------------- -------------------------------
Percentage Shares Percentage
Selling Securityholders Number of Class(2) Offered Number of Class(2)
- -------------------------------- ------------- -------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
BT Holdings (New York), Inc. 170,414 ** 170,414 **
$ 4,500,000* 1.8% $ 4,500,000* 0 **
Chrysler Corporation Master 153,751 ** 153,751 **
Retirement Trust $ 4,060,000* 1.6% $ 4,060,000* 0 **
State of Oregon/SAIF Corporation 151,479 ** 151,479 **
$ 4,000,000* 1.6% $ 4,000,000* 0 **
Shepherd Investments 142,011 ** 142,011 **
International, Ltd. $ 3,750,000* 1.5% $ 3,750,000* 0 **
Stark International 142,011 ** 142,011 **
$ 3,750,000* 1.5% $ 3,750,000* 0 **
State of Oregon Equity 142,011 ** 142,011 **
$ 3,750,000* 1.5% $ 3,750,000* 0 **
Vanguard Convertible Securities 139,550 ** 139,550 **
Fund, Inc. $ 3,685,000* 1.5% $ 3,685,000* 0 **
OCM Convertible Trust 131,408 ** 131,408 **
$ 3,470,000* 1.4% $ 3,470,000* 0 **
Allstate Insurance Company 113,609 ** 113,609 **
$ 3,000,000* 1.2% $ 3,000,000* 0 **
Commonwealthlife Insurance 113,609 ** 113,609 **
Comp. (Teamsters-Camden $ 3,000,000* 1.2% $ 3,000,000* 0 **
Non-Enhanced)
Investcorp -- SAM Fund Limited 113,609 ** 113,609 **
$ 3,000,000* 1.2% $ 3,000,000* 0 **
Offense Group Associates, L.P. 113,609 ** 113,609 **
$ 3,000,000* 1.2% $ 3,000,000* 0 **
David A. Stichter 113,609 ** 113,609 **
$ 3,000,000* 1.2% $ 3,000,000* 0 **
Susquehanna Capital Group 113,609 ** 113,609 **
$ 3,000,000* 1.2% $ 3,000,000* 0 **
Minnesota Mutual Life Insurance 109,324 ** 109,324 **
Company $ 2,900,000* 1.2% $ 2,900,000* 0 **
Bankers Trust, Trustee for 103,005 ** 103,005 **
Chrysler Corp Emp #1 Pension $ 2,720,000* 1.1% $ 2,720,000* 0 **
Plan dated 4/1/89
Golden Rule Insurance Company 98,461 ** 98,461 **
$ 2,600,000* 1.0% $ 2,600,000* 0 **
Convertible Fund 88,085 ** 88,085 **
$ 2,326,000* ** $ 2,326,000* 0 **
PRIM Board 86,153 ** 86,153 **
$ 2,275,000* ** $ 2,275,000* 0 **
Lincoln National Convertible 77,065 ** 77,065 **
Securities Fund $ 2,035,000* ** $ 2,035,000* 0 **
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially Owned After
Owned Prior To Offering(1) Completion Of Offering(1)(3)
---------------------------- -------------------------------
Percentage Shares Percentage
Selling Securityholders Number Of Class(2) Offered Number Of Class(2)
- -------------------------------- ------------- -------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Argent Offshore Fund L.P. 75,739 ** 75,739 **
$ 2,000,000* ** $ 2,000,000* 0 **
Hamilton Global Investors 75,739 ** 75,739 **
Limited $ 2,000,000* ** $ 2,000,000* 0 **
St. Albans Partners Ltd. 75,739 ** 75,739 **
$ 2,000,000* ** $ 2,000,000* 0 **
Weyerhaeuser Company Master 75,739 ** 75,739 **
Retirement Trust Convertible $ 2,000,000* ** $ 2,000,000* 0 **
Arbitrage
Raytheon Company Master Pension 75,171 ** 75,171 **
Trust $ 1,985,000* ** $ 1,985,000* 0 **
San Diego County Convertible 74,717 ** 74,717 **
$ 1,973,000* ** $ 1,973,000* 0 **
The Travelers Insurance Company 69,188 ** 69,188 **
$ 1,827,000* ** $ 1,827,000* 0 **
Delta Air Lines Master Trust 66,082 ** 66,082 **
$ 1,745,000* ** $ 1,745,000* 0 **
Arkansas PERS 65,325 ** 65,325 **
$ 1,725,000* ** $ 1,725,000* 0 **
Providian Life & Health (Camden) 56,804 ** 56,804 **
$ 1,500,000* ** $ 1,500,000* 0 **
State Employee's Retirement 54,153 ** 54,153 **
Fund of the State of Delaware $ 1,430,000* ** $ 1,430,000* 0 **
State Street Bank Custodian for 54,153 ** 54,153 **
GE Pension Trust $ 1,430,000* ** $ 1,430,000* 0 **
The Northwestern Mutual Life 47,337 ** 47,337 **
Insurance Company $ 1,250,000* ** $ 1,250,000* 0 **
Delta Airlines Master Trust 46,390 ** 46,390 **
$ 1,225,000* ** $ 1,225,000* 0 **
Delaware PERS 39,763 ** 39,763 **
$ 1,050,000* ** $ 1,050,000* 0 **
New York Life Separate Account 38,816 ** 38,816 **
#7 $ 1,025,000* ** $ 1,025,000* 0 **
Allegheny Teledyne Inc. Pension 37,869 ** 37,869 **
Plan $ 1,000,000* ** $ 1,000,000* 0 **
Arpeggio Fund, LP 37,869 ** 37,869 **
$ 1,000,000* ** $ 1,000,000* 0 **
BT Alex. Brown Inc. 37,869 ** 37,869 **
$ 1,000,000* ** $ 1,000,000* 0 **
Duckbill & Co. 37,869 ** 37,869 **
$ 1,000,000* ** $ 1,000,000* 0 **
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially Owned After
Owned Prior to Offering(1) Completion of Offering(1)(3)
---------------------------- -------------------------------
Percentage Shares Percentage
Selling Securityholders Number of Class(2) Offered Number of Class(2)
- -------------------------------- ------------- -------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Hamilton Partners Limited 37,869 ** 37,869 0 **
$ 1,000,000* ** $ 1,000,000* **
The Retail Clerks Pension Plan 37,869 ** 37,869 0 **
$ 1,000,000* ** $ 1,000,000* **
The Dow Chemical Company 33,136 ** 33,136 0 **
Employees' Retirement Plan $ 875,000* ** $ 875,000* **
Mainstay VP Convertible 30,295 ** 30,295 0 **
Portfolio $ 800,000* ** $ 800,000* **
National Steel Corp. 26,508 ** 26,508 0 **
$ 700,000* ** $ 700,000* **
Port Authority of Allegheny 24,615 ** 24,615 0 **
County Retirement & Disability $ 650,000* ** $ 650,000* **
Allowance Plan for Employees
Represented by Local 85 of the
Amalgamated Transit Union
Starvest Combined Portfolio 24,615 ** 24,615 0 **
$ 650,000* ** $ 650,000* **
San Diego City Retirement 24,274 ** 24,274 0 **
$ 641,000* ** $ 641,000* **
RJR Defined Benefit Master 24,236 ** 24,236 0 **
Retirement Trust $ 630,000* ** $ 640,000* **
AIG/National Union Fire 20,828 ** 20,828 0 **
Insurance-FRIC $ 550,000* ** $ 550,000* **
Champion International 19,881 ** 19,881 0 **
Corporation Master Retirement $ 525,000* ** $ 525,000* **
Trust
Wake Forest University 19,124 ** 19,124 0 **
$ 505,000* ** $ 505,000* **
AFTRA Health Fund 18,934 ** 18,934 0 **
$ 500,000* ** $ 500,000* **
Glacier Water Services, Inc. 18,934 ** 18,934 0 **
$ 500,000* ** $ 500,000* **
The Travelers Insurance Company 18,934 ** 18,934 0 **
$ 500,000* ** $ 500,000* **
ICI American Holdings Pension 17,041 ** 17,041 0 **
$ 450,000* ** $ 450,000* **
Zeneca Holdings Pension Trust 17,041 ** 17,041 0 **
$ 450,000* ** $ 450,000* **
Partner Reinsurance Company, 16,662 ** 16,662 0 **
Ltd. $ 440,000* ** $ 440,000* **
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially Owned After
Owned Prior To Offering(1) Completion Of Offering(1)(3)
---------------------------- -------------------------------
Percentage Shares Percentage
Selling Securityholders Number Of Class(2) Offered Number Of Class(2)
- -------------------------------- ------------- -------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
RJR Nabisco, Inc. Defined 15,147 0.02252% 15,147 0 **
Benefit Master Trust $ 400,000* 0.16000% $ 400,000* **
SPT 12,307 0.01830% 12,307 0 **
$ 325,000* 0.13000% $ 325,000* **
Walker Art Center 10,035 0.01492% 10,035 0 **
$ 265,000* 0.10600% $ 265,000* **
Bancroft Convertible Fund, Inc. 9,467 0.01408% 9,467 0 **
$ 250,000* 0.10000% $ 250,000* **
Brown & Williamson Tobacco 9,467 0.01408% 9,467 0 **
Corp. Master Retirement Trust $ 250,000* 0.10000% $ 250,000* **
Ellsworth Convertible Growth 9,467 0.01408% 9,467 0 **
and Income Fund, Inc. $ 250,000* 0.10000% $ 250,000* **
Engineers Joint Pension Fund 8,520 0.01267% 8,520 0 **
$ 225,000* 0.09000% $ 225,000* **
Nalco Chemical Company 8,520 0.01267% 8,520 0 **
$ 225,000* 0.09000% $ 225,000* **
United Food and Commercial 8,520 0.01267% 8,520 0 **
Workers Local 1262 and $ 225,000* 0.09000% $ 225,000* **
Employers Pension Fund
Franklin & Marshall College 8,142 0.01211% 8,142 0 **
$ 215,000* 0.08600% $ 215,000* **
The Travelers Life & Annuity 8,142 0.01211% 8,142 0 **
Company $ 215,000* 0.08600% $ 215,000* **
Mainstay Strategic Value Fund 6,627 0.00986% 6,627 0 **
$ 175,000* 0.07000% $ 175,000* **
Univar Corporation 6,437 0.00957% 6,437 0 **
$ 170,000* 0.06800% $ 170,000* **
Baptist Health 4,923 0.00732% 4,923 0 **
$ 130,000* 0.05200% $ 130,000* **
Dunham & Assoc. Fund III 4,923 0.00732% 4,923 0 **
$ 130,000* 0.05200% $ 130,000* **
Associated Electric & Gas 3,786 0.00563% 3,786 0 **
Insurance Services Limited $ 100,000* 0.04000% $ 100,000* **
The Travelers Series Trust 3,786 0.00563% 3,786 0 **
Convertible Bond Portfolio $ 100,000* 0.04000% $ 100,000* **
Unifi, Inc. Profit Sharing Plan 3,029 0.00450% 3,029 0 **
and Trust $ 80,000* 0.03200% $ 80,000* **
Boston Museum of Fine Art 2,423 0.00360% 2,423 0 **
$ 64,000* 0.02560% $ 64,000* **
Kettering Medical Center Funded 1,514 0.00225% 1,514 0 **
Depreciation Account $ 40,000* 0.01600% $ 40,000* **
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially Owned After
Owned Prior to Offering(1) Completion of Offering(1)(3)
---------------------------- -------------------------------
Percentage Shares Percentage
Selling Securityholders Number of Class(2) Offered Number of Class(2)
- -------------------------------- ------------- ------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
The Fondren Foundation 1,136 ** 1,136 **
$30,000* ** $30,000* 0 **
Island Holdings, Inc. 946 ** 946 **
$25,000* ** $25,000* 0 **
Inland Foundation Inc. 378 ** 378 **
$10,000* ** $10,000* 0 **
Dunham & Assoc. Fund II 227 ** 227 **
$6,000* ** $6,000* 0 **
BS Debt Income Fund-Class 189 ** 189 **
A $5,000* ** $5,000* 0 **
Unnamed holders of Securities or 9,965,000 4.0 9,965,000 0 **
any future transferees, $ 377,372 ** 377,372* 0 **
pledges, donees or successors
of or from any such unnamed
holder
</TABLE>
* Amount of Notes
** Less than one percent
+ Percentage of Notes held by such Selling Securityholder
- ---------------------
(1) Share amounts assume conversion of the Notes, at an assumed conversion rate
of 37.8698 shares per $1,000 principal amount of Notes.
(2) Based upon 67,236,000 shares of voting Common Stock and an aggregate amount
of $250,000,000 of Notes outstanding as of July 31, 1998. Does not include
23,323,554 shares of nonvoting Class B Common Stock.
(3) Assumes offer and sale of all Securities, although Selling Securityholders
are not obligated to sell any Securities.
21
<PAGE>
DESCRIPTION OF NOTES
The Notes were issued under an Indenture, dated as of June 1, 1998 (the
"Indenture"), between the Company and State Street Bank and Trust Company of
California, N.A., as Trustee (the "Trustee"), copies of which are available
for inspection at the Corporate Trust Office of the Trustee in the Borough of
Manhattan, The City of New York. Wherever particular defined terms of the
Indenture (including the Notes and the various forms thereof) are referred to,
such defined terms are incorporated herein by reference (the Notes and various
terms relating to the Notes being referred to in the Indenture as "Indenture
Securities"). References in this section to the "Company" are solely to BEA
Systems, Inc. and not its subsidiaries. The following summaries of certain
provisions of the Indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, the detailed provisions of
the Notes and the Indenture, including the definitions therein of certain terms.
GENERAL
The Notes are unsecured subordinated obligations of the Company, are limited
to $250,000,000 aggregate principal amount and mature on June 15, 2005 and be
payable at a price of 100% of the principal amount thereof. The Notes bear
interest at the rate of 4% per annum from June 12, 1998, payable semiannually on
June 15 and December 15 of each year, commencing on December 15, 1998. Interest
payable per $1,000 principal amount of Notes for the period from June 12, 1998
to December 15, 1998 will be $20.33.
The Notes will be convertible into Common Stock initially at the conversion
rate of 37.8698 shares per $1,000 principal amount of Notes, subject to
adjustment upon the occurrence of certain events described under "--Conversion
Rights," at any time on or after the 90th day following the initial issue date
of the Notes and prior to the close of business on the maturity date, unless
previously redeemed or repurchased.
The Notes were initially offered and sold to Qualified Institutional Buyers as
defined under Rule 144A under the Securities Act ("Qualified Institutional
Buyers") in reliance on Rule 144A.
GLOBAL NOTE; BOOK-ENTRY SYSTEM
Notes held by Qualified Institutional Buyers as defined in Rule 144A under the
Securities Act (each a "Qualified Institutional Buyer"), have initially been
evidenced by one or more global Notes in definitive, fully registered form
without interest coupons (collectively, the "Global Note"), which was
deposited with the Trustee as custodian for DTC and registered in the name of
Cede & Co. ("Cede"), as nominee of DTC. The Global Note (and any notes issued
in exchange therefor) will be subject to certain restrictions on transfer set
forth therein and in the Indenture and will bear the legend regarding such
restrictions set forth under "Notice to Investors." Except as set forth below,
record ownership of the Global Note may be transferred, in whole or in part,
only to another nominee of DTC or to a successor of DTC or its nominee.
Qualified Institutional Buyers have initially beneficially owned interests in
the Global Note held by DTC only through participants in DTC ("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"). Qualified Institutional Buyers have
been permitted to hold their interests in the Global Note directly through DTC
if such Qualified Institutional Buyers are participants in DTC or indirectly
through organizations that are Participants. Transfers between Participants are
effected in the ordinary way in accordance with DTC's rules and are settled in
same-day 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 Note to such persons may be limited.
Cash payment of interest on and principal of and the redemption or repurchase
of the Global Note, as well as any payment of Liquidated Damages, will be made
to Cede, the nominee for DTC, as the registered owner of the Global Note, by
wire transfer of immediately available funds on each relevant payment date.
Neither the Company nor the Trustee has any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Note, including for any delay by DTC or any
Participant or Indirect Participant in identifying the
22
<PAGE>
beneficial ownership interests, and the Company and the Trustee may conclusively
rely on, and shall be protected in relying on, instructions from DTC for all
purposes.
The Company has been informed that, with respect to any cash payment of
interest on, principal of, or the redemption or repurchase price of, the Global
Note, as well as any payment of Liquidated Damages, DTC's practice is to credit
Participants' accounts on the payment date therefor with payments in amounts
proportionate to their respective beneficial interests in the Notes represented
by the Global Note as shown on the records of DTC (adjusted as necessary so that
such payments are made with respect to whole Notes 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 Notes represented by the
Global Note held through such Participants will be the responsibility of such
Participants, as is now the case with securities held for the accounts of
customers registered in "street name."
Redemption notices shall be sent to Cede. If less than all the Notes are being
redeemed, DTC's practice is to determine by lot the amount of the holdings of
each Participant in such issue to be redeemed.
Neither DTC or Cede will consent or vote with respect to the Notes. Under its
usual procedures, DTC mails an omnibus proxy (the "Omnibus Proxy") to the
issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede's consenting or voting rights to those Participants to whose accounts the
Notes are credited on the record date identified in a listing attached to the
Omnibus Proxy.
Because DTC can only act on behalf of Participants, who in turn act on behalf
of Indirect Participants, the ability of a person having a beneficial interest
in the principal amount represented by the Global Note to pledge such interest
to persons or entities that do not participate in the DTC book-entry system, or
otherwise take actions in respect of such interest, may be affected by the lack
of a physical certificate evidencing such interest.
DTC has advised the Company that it will take any action permitted to be taken
by a holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more Participants to whose
account with DTC interests in the Global Note are credited and only in respect
of such portion of the principal amount of the Notes represented by the Global
Note as to which such Participant 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, as amended, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical transfer and delivery of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations and may
include certain other organizations. Certain of such Participants (or their
representatives), together with other entities, own DTC. Indirect access to the
DTC system is available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. The rules applicable to DTC and its
Participants are on file with the Commission.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of beneficial ownership interests in the Global Note among
Participants, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time.
The information in this section concerning DTC and DTC's book-entry system has
been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof. None of the Company,
the Trustee nor any of their respective agents will have any responsibility for
the performance by DTC, its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations, including maintaining, supervising or reviewing the records relating
to, or payments made on account of, beneficial ownership interests in the Global
Note.
So long as DTC, or its nominee, is the registered owner of the Global Note,
DTC or its nominee, as the case may be, will be considered the sole legal owner
or holder of the Notes represented by the Global Note for all purposes under the
Indenture. Except as set forth below, owners of beneficial interests in such
Global Note will not be entitled to have Notes represented by the Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of
23
<PAGE>
Notes in definitive form and will not be considered the legal owners or holder
thereof under the Indenture. Accordingly, each person owning a beneficial
interest in the Global Note must rely on the procedures of DTC and, if such
person is not a Participant, those of the Participant through which such person
owns its interests, in order to exercise any rights of a holder under the
Indenture or such Note.
If DTC is at any time unwilling, unable or ineligible to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue Notes in definitive registered form, without
coupons, in denominations of $1,000 of principal amount at maturity and any
integral multiple thereof, in exchange for the Global Note representing such
Notes. In addition, the Company may at any time and in its sole discretion
determine not to have any Notes in registered form represented by the Global
Note and, in such event, will issue Notes in definitive registered form, without
coupons, in exchange for the Global Note representing such Notes. In any such
instance, an owner of a beneficial interest in the Global Note will be entitled
to physical delivery in definitive form of Notes represented by such Global Note
equal in principal amount to such beneficial interest and to have such Notes
registered in its name.
CONVERSION RIGHTS
The Holder of any Note has the right, at the Holder's option, to convert any
portion of the principal amount of any Note that is an integral multiple of
$1,000 into shares of Common Stock at any time on or after the 90th day
following the original issue date of the Notes and prior to the close of
business on the maturity date, unless previously redeemed or repurchased, at a
conversion rate of 37.8698 shares of Common Stock per $1,000 principal amount of
Notes (the "Conversion Rate") (equivalent to an approximate conversion price
of $26.41 per share of Common Stock), subject to adjustment in certain events as
described below. The right to convert a Note called for redemption or delivered
for repurchase will terminate at the close of business on the Redemption Date
for such Note or the Repurchase Date, as the case may be.
The right of conversion attaching to any Note may be exercised by the Holder
by delivering the Note at the Corporate Trust Office of the Trustee in the
Borough of Manhattan, The City of New York, accompanied by a duly signed and
completed notice of conversion. Such notice of conversion can be obtained at the
office of the Trustee at its Corporate Trust Office in New York City. The
conversion date will be the date on which the Note and the duly signed and
completed notice of conversion are so delivered.
As promptly as practicable on or after the conversion date, the Company will
issue and deliver to the Trustee a certificate or certificates for the number of
full shares of Common Stock issuable upon conversion, together with payment in
lieu of any fraction of a share; such certificate will be sent by the Trustee to
the Conversion Agent for delivery to the Holder. Such shares of Common Stock
issuable upon conversion of the Notes, in accordance with the provisions of the
Indenture, will be fully paid and nonassessable and will rank pari passu with
the other shares of Common Stock of the Company outstanding from time to time.
Any Note surrendered for conversion during the period from the close of business
on any Regular Record Date to the opening of business on the next succeeding
Interest Payment Date (except Notes (or portions thereof) called for redemption
on a Redemption Date or to be repurchased on a Repurchase Date and, as a result,
the right to convert such Notes would terminate during such period) must be
accompanied by payment of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Notes being surrendered for
conversion. In the case of any Note which has been converted after any Regular
Record Date but before the next succeeding Interest Payment Date, interest
payable on such Interest Payment Date shall be payable on such Interest Payment
Date notwithstanding such conversion, and such interest shall be paid to the
Holder of such Note on such Regular Record Date. As a result of the foregoing
provisions, Holders that surrender Notes for conversion on a date that is not an
Interest Payment Date will not receive any interest for the period from the
Interest Payment Date next preceding the date of conversion to the date of
conversion or for any later period, even if the Notes are surrendered after a
notice of redemption (except for the payment of interest on Notes called for
redemption on a Redemption Date or to be repurchased on a Repurchase Date for
which the right to convert such Notes would terminate between a Regular Record
Date and the Interest Payment Date to which it relates). No other payment or
adjustment for interest, or for any dividends in respect of Common Stock, will
be made upon conversion. Holders of Common Stock issued upon conversion will not
be entitled to receive any dividends payable to holders of Common Stock as of
any record time or date before the close of business on the conversion date. No
fractional shares will be issued upon conversion but, in lieu thereof, an
appropriate amount will be paid in cash by the Company based on the market price
of the Common Stock at the close of business on the day of conversion.
24
<PAGE>
A Holder delivering a Note for conversion will not be required to pay any
taxes or duties in respect of the issue or delivery of Common Stock on
conversion but will be required to pay any tax or duty which may be payable in
respect of any transfer involved in the issue or delivery of the Common Stock in
a name other than that of the Holder of the Note. Certificates representing
shares of Common Stock will not be issued or delivered unless all taxes and
duties, if any, payable by the Holder have been paid.
The Conversion Rate is subject to adjustment in certain events, including,
without duplication: (a) dividends (and other distributions) payable in Common
Stock on shares of capital stock of the Company, (b) the issuance to all holders
of Common Stock of rights, options or warrants entitling them to subscribe for
or purchase Common Stock at less than the then Current Market Price of such
Common Stock (determined as provided in the Indenture) as of the record date for
shareholders entitled to receive such rights, options or warrants, (c)
subdivisions, combinations and reclassifications of Common Stock, (d)
distributions to all holders of Common Stock of evidences of indebtedness of the
Company, shares of capital stock, cash or assets (including securities, but
excluding those dividends, rights, options, warrants and distributions referred
to above, dividends and distributions paid exclusively in cash and distributions
upon mergers or consolidations to which the next succeeding paragraph applies),
(e) distributions consisting exclusively of cash (excluding any cash portion of
distributions referred to in (d) above, or cash distributed upon a merger or
consolidation to which the next succeeding paragraph applies) to all holders of
Common Stock in an aggregate amount that, combined together with (i) other such
all-cash distributions made within the preceding 12 months in respect of which
no adjustment has been made and (ii) any cash and the fair market value of other
consideration payable in respect of any tender offer by the Company or any of
its subsidiaries for Common Stock concluded within the preceding 12 months in
respect of which no adjustment has been made, exceeds 10% of the Company's
market capitalization (being the product of the Current Market Price per share
of the Common Stock on the record date for such distribution and the number of
shares of Common Stock then outstanding), and (f) the successful completion of a
tender offer made by the Company or any of its subsidiaries for Common Stock
which involves an aggregate consideration that, together with (i) any cash and
other consideration payable in a tender offer by the Company or any of its
subsidiaries for Common Stock expiring within the 12 months preceding the
expiration of such tender offer in respect of which no adjustment has been made
and (ii) the aggregate amount of any such all-cash distributions referred to in
(e) above to all holders of Common Stock within the 12 months preceding the
expiration of such tender offer in respect of which no adjustments have been
made, exceeds 10% of the Company's market capitalization on the expiration of
such tender offer. The Company reserves the right to make such increases in the
Conversion Rate in addition to those required in the foregoing provisions as it
considers to be advisable in order that any event treated for United States
federal income tax purposes as a dividend of stock or stock rights will not be
taxable to the recipients. No adjustment of the Conversion Rate will be required
to be made until the cumulative adjustments amount to 1.0% or more of the
Conversion Rate. The Company will compute any adjustments to the Conversion Rate
pursuant to this paragraph and will give notice by mail to Holders of the
Registered Notes of any adjustments.
In case of any consolidation or merger of the Company with or into another
Person or any merger of another Person into the Company (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock), or in case of any sale or transfer of all or
substantially all of the assets of the Company, each Note then outstanding will,
without the consent of the Holder of any Note, become convertible only into the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock into which such Note was convertible immediately prior thereto
(assuming such holder of Common Stock failed to exercise any rights of election
and that such Note was then convertible).
The Company from time to time may increase the Conversion Rate by any amount
for any period of at least 20 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. No such increase shall be taken into
account for purposes of determining whether the last reported bid price of the
Common Stock exceeds the conversion price by 105% in connection with an event
which otherwise would be a Change in Control or for purposes of determining
whether the last reported bid price of the Common Stock is at least 140% of the
conversion price in connection with conditional redemption of the Notes at the
option of the Company.
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
United States federal income tax purposes (e.g., distributions of evidences of
indebtedness or assets of the Company, but generally not stock dividends on
common stock or rights to subscribe for common stock) and, pursuant to the anti-
dilution provisions of the Indenture, the number of shares into which Notes are
convertible is
25
<PAGE>
increased, such increase may be deemed for federal income tax purposes to be the
payment of a taxable dividend to Holders of Notes. See "Certain United States
Federal Income Tax Considerations--U.S. Holders--Distributions on Common Stock."
SUBORDINATION
The payment of the principal of, premium, if any, and interest on the Notes
(including any Liquidated Damages (as defined) and any amounts payable upon the
redemption or the repurchase of the Notes permitted by the Indenture) will be
subordinated in right of payment to the extent set forth in the Indenture to the
prior payment in full of the principal of, premium, if any, interest and other
amounts in respect of all Senior Indebtedness of the Company. The principal
amount of outstanding Senior Indebtedness was approximately $28.9 million at
July 31, 1998 and the Company's subsidiaries had approximately $21.2 million of
indebtedness and other liabilities outstanding (excluding liabilities of a type
not required to be reflected on a balance sheet in accordance with generally
accepted accounting principles and intercompany liabilities) to which the Notes
would have been effectively subordinated.
"Senior Indebtedness" is defined in the Indenture to mean: the principal of
(and premium, if any) and interest (including all interest accruing subsequent
to the commencement of any bankruptcy or similar proceeding, whether or not a
claim for post-petition interest is allowable as a claim in any such proceeding)
on, and all fees and other amounts payable in connection with, the following,
whether absolute or contingent, secured or unsecured, due or to become due,
outstanding on the date of the Indenture or thereafter created, incurred or
assumed: (a) indebtedness of the Company evidenced by a credit or loan
agreement, note, bond, debenture or other written obligation, (b) all
obligations of the Company for money borrowed, (c) all obligations of the
Company evidenced by a note or similar instrument given in connection with the
acquisition of any businesses, properties or assets of any kind, (d) obligations
of the Company (i) as lessee under leases required to be capitalized on the
balance sheet of the lessee under generally accepted accounting principles or
(ii) as lessee under other leases for facilities, capital equipment or related
assets, whether or not capitalized, entered into or leased for financing
purposes, (e) all obligations of the Company under interest rate and currency
swaps, caps, floors, collars, hedge agreements, forward contracts or similar
agreements or arrangements, (f) all obligations of the Company with respect to
letters of credit, bankers' acceptances and similar facilities (including
reimbursement obligations with respect to the foregoing), (g) all obligations of
the Company issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable and accrued liabilities arising
in the ordinary course of business), (h) all obligations of the type referred to
in clauses (a) through (g) above of another Person and all dividends of another
Person, the payment of which, in either case, the Company has assumed or
guaranteed, or for which the Company is responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or otherwise, or which
is secured by a lien on the property of the Company, and (i) renewals,
extensions, modifications, replacements, restatements and refundings of, or any
indebtedness or obligation issued in exchange for, any such indebtedness or
obligation described in clauses (a) through (h) of this paragraph; provided,
however, that Senior Indebtedness shall not include the Indenture Securities or
any such indebtedness or obligation if the terms of such indebtedness or
obligation (or the terms of the instrument under which, or pursuant to which it
is issued) expressly provide that such indebtedness or obligation is not
superior in right of payment to the Indenture Securities.
No payment on account of principal of, premium, if any, or interest on
(including any Liquidated Damages (as defined)), or the redemption or repurchase
of, the Notes may be made by the Company if (i) a default in the payment of
principal, premium, if any, or interest (including a default under any
repurchase or redemption obligation) or other amounts with respect to Senior
Indebtedness occurs and is continuing beyond the applicable grace period or (ii)
any other event of default occurs and is continuing with respect to Designated
Senior Debt (as defined below) that permits the holders thereof to accelerate
the maturity thereof, and the Trustee receives a notice of such default (a
"Payment Blockage Notice") from the Company, a holder of such Designated
Senior Debt or other person permitted to give such notice under the Indenture.
Payments on the Notes may and shall be resumed (a) in the case of a Payment
default, upon the date on which such default is cured or waived and (b) in the
case of a nonpayment default, the earlier of the date on which such nonpayment
default is cured or waived or 179 days after the date on which the Payment
Blockage Notice is received. No new period or payment blockage may be commenced
unless and until (i) 365 days have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice and (ii) all scheduled payments of
principal, premium, if any, and interest on the Notes that have come due have
been paid in full in cash. No nonpayment default that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shall be,
or be made, the basis for any subsequent Payment Blockage Notice. "Designated
Senior Debt" means the Company's obligations under any particular Senior
Indebtedness in which the
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instrument creating or evidencing the same or the assumption or guarantee
thereof (or related agreements or documents to which the Company is a party)
expressly provides that such indebtedness shall be "Designated Senior Debt" for
purposes of the Indenture (provided that such instrument, agreement or other
document may place limitations and conditions on the right of such Senior
Indebtedness to exercise the rights of Designated Senior Debt). In addition,
upon any acceleration of the principal due on the Notes as a result of an Event
of Default or payment or distribution of assets of the Company to creditors upon
any dissolution, winding up, liquidation or reorganization, whether voluntary or
involuntary, marshaling of assets, assignment for the benefit of credits, or in
bankruptcy, insolvency, receivership or other similar proceedings of the
Company, all principal, premium, if any, interest and other amounts due on all
Senior Indebtedness must be paid in full before the Holders of the Notes are
entitled to receive any payment. By reason of such subordination, in the event
of insolvency, creditors of the Company who are holders of Senior Indebtedness
may recover more, ratably, than the Holders of the Notes, and such subordination
may result in a reduction or elimination of payments to the Holders of the
Notes.
In addition, the Notes will be structurally subordinated to all indebtedness
and other liabilities (including trade payables and lease obligations) of the
Company's subsidiaries, as any right of the Company to receive any assets of its
subsidiaries upon their liquidation or reorganization (and the consequent right
of the Holders of the Notes to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that the Company itself is recognized as a
creditor of such subsidiary, in which case the claims of the Company would still
be subordinate to any security interest in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by the Company.
The Indenture does not limit the Company's or its subsidiaries' ability to
incur Senior Indebtedness or any other indebtedness.
OPTIONAL REDEMPTION
The Notes are not subject to redemption at the option of the Company prior to
June 20, 2001 and are redeemable on and after such date at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days notice
to each Holder, at the prices set forth below; provided, however, that the Notes
are not redeemable at the option of the Company following June 20, 2001 and
before June 17, 2003 unless the last reported bid price for the Common Stock is
at least 140% of the conversion price for at least 20 trading days within a
period of 30 consecutive trading days ending within five trading days of the
call for redemption.
The redemption price (expressed as a percentage of principal amount) is as
follows for the 12-month periods beginning on June 15 of the following years
(June 20 through June 14 in the case of the first such period and June 17
through June 14 in the case of the third such period):
Year Redemption
---- ----------
Price
-----
2001 102.29%
2002 101.71
2003 101.14
2004 100.57
and thereafter is equal to 100% of the principal amount, in each case together
with accrued interest to the date of redemption.
No sinking fund is provided for the Notes.
PAYMENT AND CONVERSION
The principal of Notes are payable in U.S. dollars, against surrender thereof
at the Corporate Trust Office of the Trustee in the Borough of Manhattan, The
City of New York, by dollar check drawn on, or by transfer to a dollar account
(such transfer to be made only to Holders of an aggregate principal amount of
Notes in excess of $2,000,000) maintained by the Holder with, a bank in New York
City. Payment of any installment of interest on Notes will be made to the Person
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in whose name such Note (or any predecessor Note) is registered at the close of
business on the June 1 or the December 1 (whether or not a Business Day)
immediately preceding the relevant Interest Payment Date (a "Regular Record
Date"). Payments of such interest will be made by a dollar check drawn on a
bank in New York City mailed to the Holder at such Holder's registered address
or, upon application by the Holder thereof to the Trustee not later than the
applicable Regular Record Date, by transfer to a dollar account (such transfer
to be made only to Holders of an aggregate principal amount of Notes in excess
of $2,000,000) maintained by the Holder with a bank in New York City. No
transfer to a dollar account will be made unless the Trustee has received
written wire instructions not less than 15 days prior to the relevant payment
date.
Payments in respect of the principal of (and premium, if any) and interest on
any Registered Global Note registered in the name of DTC or its nominee will be
payable by the Trustee to DTC or its nominee in its capacity as the registered
Holder under the Indenture. Under the terms of the Indenture, the Company and
the Trustee will treat the Persons in whose names the Notes, including the
Registered Global Note, are registered as the owners thereof for the purpose of
receiving such payments and for any and all other purposes whatsoever.
Consequently, neither the Company, the Trustee nor any agent of the Company or
the Trustee has or will have any responsibility or liability for (i) any aspect
of DTC's records or any Participant's or Indirect Participant's records relating
to or payments made on account of beneficial ownership interests in the
Registered Global Note, or for maintaining, supervising or reviewing any of
DTC's records or any Participant's or Indirect Participant's records relating to
the beneficial ownership interests in the Registered Global Note, or (ii) any
other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants.
Any payment on the Notes due on any day which is not a Business Day need not
be made on such day, but may be made on the next succeeding Business Day with
the same force and effect as if made on such due date, and no interest shall
accrue on such payment for the period from and after such date. "Business
Day," when used with respect to any place of payment, place of conversion or
any other place, as the case may be, means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in such
place of payment, place of conversion or other place, as the case may be, are
authorized or obligated by law or executive order to close; provided, however,
that a day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to close shall not be a Business Day for
certain purposes.
Notes may be surrendered for conversion at the Corporate Trust Office of the
Trustee in the Borough of Manhattan, The City of New York. Notes surrendered for
conversion must be accompanied by appropriate notices and any payments in
respect of interest or taxes, as applicable, as described above under
"--Conversion Rights."
The Company has initially appointed the Trustee as Paying Agent and Conversion
Agent. The Company may at any time terminate the appointment of any Paying Agent
or Conversion Agent and appoint additional or other Paying Agents and Conversion
Agents, provided that until the Notes have been delivered to the Trustee for
cancellation, or moneys sufficient to pay the principal of, premium, if any, and
interest on the Notes have been made available for payment and either paid or
returned to the Company as provided in the Indenture, it will maintain an office
or agency in the Borough of Manhattan, The City of New York for surrender of
Notes for conversion. Notice of any such termination or appointment and of any
change in the office through which any Paying Agent or Conversion Agent will act
will be given in accordance with "--Notices" below.
All moneys deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of principal of, premium, if any, or interest
on any Notes which remain unclaimed at the end of two years after such payment
has become due and payable will be repaid to the Company, and the Holder of such
Note will thereafter look only to the Company for payment thereof.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL
If a Change in Control (as defined) occurs, each Holder of Notes shall have
the right, at the Holder's option, to require the Company to repurchase all of
such Holder's Notes not theretofore called for redemption, or any portion of the
principal amount thereof, that is $5,000 or an integral multiple of $1,000 in
excess thereof, on the date (the "Repurchase Date") that is 45 days after the
date of the Company Notice (as defined), at a price equal to 100% of the
principal amount of the Notes to be repurchased, together with interest accrued
to the Repurchase Date (the "Repurchase Price").
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The Company may, at its option, in lieu of paying the Repurchase Price in
cash, pay the Repurchase Price in Common Stock valued at 95% of the average of
the closing bid prices of the Common Stock for the five trading days immediately
preceding and including the third day prior to the Repurchase Date; provided
that payment may not be made in Common Stock unless the Company satisfies
certain conditions with respect to such payment prior to the Repurchase Date as
provided in the Indenture.
Within 30 days after the occurrence of a Change in Control, the Company is
obligated to give to all Holders of the Notes notice, as provided in the
Indenture (the "Company Notice"), of the occurrence of such Change in Control
and of the repurchase right arising as a result thereof. The Company must also
deliver a copy of the Company Notice to the Trustee. To exercise the repurchase
right, a Holder of Notes must deliver on or before the 30th day after the date
of the Company Notice irrevocable written notice to the Trustee of the Holder's
exercise of such right, together with the Notes with respect to which the right
is being exercised.
A Change in Control shall be deemed to have occurred at such time after the
original issuance of the Notes as there shall occur:
(i) the acquisition by any Person (including any syndicate or group deemed
to be a "person" under Section 13(d)(3) of the Exchange Act) of beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of capital stock
of the Company entitling such Person to exercise 50% or more of the total
voting power of all shares of capital stock of the Company entitled to vote
generally in elections of directors, other than (A) any such acquisition by
the Company, any subsidiary of the Company or any employee benefit plan of the
Company or (B) any such acquisition by Warburg, Pincus Ventures, L.P. or any
person controlled by or under common control with Warburg, Pincus Ventures,
L.P., so long as any such acquisition does not result, directly or indirectly,
in a "going private transaction" within the meaning of the Exchange Act; or
(ii) any consolidation or merger of the Company with or into, any other
Person, any merger of another Person into the Company, or any conveyance,
sale, transfer or lease of all or substantially all of the assets of the
Company to another Person (other than (a) any such transaction (x) which does
not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of capital stock of the Company and (y) pursuant to which
the holders of the Common Stock immediately prior to such transaction have the
entitlement to exercise, directly or indirectly, 50% or more of the total
voting power of all shares of capital stock entitled to vote generally in the
election of directors of the continuing or surviving corporation immediately
after such transaction and (b) any merger which is effected solely to change
the jurisdiction of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares of Common Stock
into solely shares of common stock); provided, however, that a Change in
Control shall not be deemed to have occurred if the closing bid price per
share of the Common Stock for any five trading days within the period of 10
consecutive trading days ending immediately after the later of the Change in
Control or the public announcement of the Change in Control (in the case of a
Change in Control under clause (i) above) or the period of 10 consecutive
trading days ending immediately before the Change in Control (in the case of a
Change in Control under clause (ii) above) shall equal or exceed 105% of the
Conversion Price of the Notes in effect on each such trading day. "Beneficial
Owner" shall be determined in accordance with Rule 13d-3 promulgated by the
Commission under the Exchange Act, as in effect on the date of execution of
the Indenture. "Person" includes any syndicate or group which would be
deemed to be a "person" under Section 13(d)(3) of the Exchange Act.
Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to Holders of
the Notes. The Company will comply with this rule to the extent applicable at
that time.
The Company may, to the extent permitted by applicable law, at any time
purchase Notes in the open market or, by tender at any price or by private
agreement. Any Note so purchased by the Company may, to the extent permitted by
applicable law and subject to restrictions contained in the Purchase Agreement,
be re-issued or resold or may, at the Company's option, be surrendered to the
Trustee for cancellation. Any Notes surrendered as aforesaid may not be re-
issued or resold and will be canceled promptly.
The foregoing provisions would not necessarily afford Holders of the Notes
protection in the event of highly leveraged or other transactions involving the
Company that may adversely affect Holders.
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The Company's ability to repurchase Notes upon the occurrence of a Change in
Control is subject to limitations. There can be no assurance that the Company
would have the financial resources, or would be able to arrange financing, to
pay the Repurchase Price for all the Notes that might be delivered by Holders of
Notes seeking to exercise the repurchase right. Moreover, although under the
Indenture the Company may elect, subject to satisfaction of certain conditions,
to pay the repurchase price for the Notes using shares of Common Stock,
Company's ability to repurchase Notes may be limited or prohibited by the terms
of borrowing arrangements, including Senior Indebtedness, existing at the time
of a Change in Control. The Company's ability to repurchase Notes with cash may
also be limited by the terms of its subsidiaries' borrowing arrangements due to
dividend restrictions. Any failure by the Company to repurchase the Notes when
required following a Change in Control would result in an Event of Default under
the Indenture whether or not such repurchase is permitted by the subordination
provisions of the Indenture. Any such default may, in turn, cause a default
under Senior Indebtedness of the Company. Moreover, the occurrence of a Change
in Control could result in an event of default under terms of other Senior
Indebtedness of the Company. As a result, in each case, any repurchase of the
Notes would, absent a waiver, be prohibited under the subordination provisions
of the Indenture until the Senior Indebtedness is paid in full. In addition, the
Company's repurchase of Notes as a result of the occurrence of a Change in
Control may be prohibited or limited by, or create an event of default under,
the terms of agreements related to borrowings which the Company may enter into
from time to time, including agreements relating to Senior Indebtedness. See
"--Subordination."
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may not consolidate with or merge into any other Person or convey,
transfer, sell or lease its properties and assets substantially as an entirety
to any Person, and the Company shall not permit any Person to consolidate with
or merge into the Company or convey, transfer, sell or lease such Person's
properties and assets substantially as an entirety to the Company unless (a) the
Person formed by such consolidation or into or with which the Company is merged
or the Person to which the properties and assets of the Company are so conveyed,
transferred, sold or leased shall be a corporation, limited liability company,
partnership or trust organized and existing under the laws of the United States,
any State thereof or the District of Columbia and, if other than the Company,
shall expressly assume the payment of the principal of, premium, if any, and
interest on the Notes and the performance of the other covenants of the Company
under the Indenture, and (b) immediately after giving effect to such
transaction, no Event of Default, and no event that, after notice or lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing.
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture: (a) failure to
pay principal of or premium, if any, on any Note when due, whether or not such
payment is prohibited by the subordination provisions of the Notes and the
Indenture; (b) failure to pay any interest (including any Liquidated Damages) on
any Note when due, continuing for 30 days, whether or not such payment is
prohibited by the subordination provisions of the Notes and the Indenture; (c)
failure to provide a Company Notice in the event of a Change in Control whether
or not such notice is prohibited by the subordination provisions of the Notes
and the Indenture; (d) failure to perform any other covenant of the Company in
the Indenture, continuing for 60 days after written notice as provided in the
Indenture; (e) any indebtedness under any bonds, debentures, notes or other
evidences of indebtedness for money borrowed (or any guarantee thereof) by the
Company or any Significant Subsidiary (as defined) in an aggregate principal
amount in excess of $10,000,000 is not paid at final maturity thereof (either at
its stated maturity or upon acceleration thereof) and such indebtedness is not
discharged, or such acceleration is not rescinded or annulled, within a period
of 30 days after notice as provided in the Indenture; and (f) certain events of
bankruptcy, insolvency or reorganization with respect to the Company or any
Significant Subsidiary. Subject to the provisions of the Indenture relating to
the duties of the Trustee in case an Event of Default shall occur and be
continuing, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request or direction of any of the
Holders, unless such Holders shall have offered to the Trustee reasonable
indemnity. Subject to such provisions for the indemnification of the Trustee,
the Holders of a majority in aggregate principal amount of the Outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee.
If an Event of Default (other than as specified in clause (f) above with
respect to the Company) shall occur and be continuing, either the Trustee or the
Holders of at least 25% in principal amount of the Outstanding Notes may,
subject to
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the subordination provisions of the Indenture, accelerate the maturity of all
Notes; provided, however, that after such acceleration, but before a judgment or
decree based on acceleration, the Holders of a majority in aggregate principal
amount of Outstanding Notes may, under certain circumstances, rescind and annul
such acceleration if all Events of Default, other than the non-payment of
principal of the Notes which have become due solely by such declaration of
acceleration, have been cured or waived as provided in the Indenture. If an
Event of Default as specified in clause (f) above occurs and is continuing, then
the principal of, and accrued interest on, all the Notes shall automatically
become immediately due and payable without any declaration or other act on the
part of the Holders of the Notes or the Trustee. For information as to waiver of
defaults, see "--Meetings, Modification and Waiver."
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and the Holders of at least 25% in aggregate principal amount of the
outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such Proceeding as trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a Holder of a
Note for the enforcement of payment of the principal of, premium, if any, or
interest (including Liquidated Damages) on such Note on or after the respective
due dates expressed in such Note or of the right to convert such Note in
accordance with the Indenture.
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.
MEETINGS, MODIFICATION AND WAIVER
The Indenture contains provision for convening meetings of the Holders of
Notes to consider matters affecting their interests.
Certain limited modifications of the Indenture may be made without the
necessity of obtaining the consent of the Holders of the Notes. Other
modifications and amendments of the Indenture may be made, and certain past
defaults by the Company may be waived, either (i) with the written consent of
the Holders of not less than a majority in aggregate principal amount of the
Notes at the time outstanding or (ii) by the adoption of a resolution, at a
meeting of Holders of the Notes at which a quorum is present, by the Holders of
at least 66-2/3% in aggregate principal amount of the Notes represented at such
meeting. However, no such modification or amendment may, without the consent of
the Holder of each outstanding Note affected thereby (a) change the stated
maturity of the principal of, or any installment of interest on, any Note, (b)
reduce the principal amount of, or the premium, if any, or interest on, any
Note, (c) reduce the amount payable upon a redemption or mandatory repurchase,
(d) modify the provisions with respect to the repurchase right of the Holders in
a manner adverse to the Holders, (e) change the place or currency of payment of
principal of, premium, if any, or interest on, any Note (including any payment
of Liquidated Damages or of the Repurchase Price in respect of such Note), (f)
impair the right to institute suit for the enforcement of any payment on or with
respect to any Note, (g) modify the obligation of the Company to maintain an
office or agency in New York City, (h) except as otherwise permitted or
contemplated by provisions concerning consolidation, merger, conveyance,
transfer, sale or lease of all or substantially all of the property and assets
of the Company, adversely affect the right of Holders to convert any of the
Notes or to require the Company to repurchase any Note other than as provided in
the Indenture, (i) modify the subordination provisions in a manner adverse to
the Holders of the Notes, (j) reduce the above-stated percentage of outstanding
Notes necessary to modify or amend the Indenture, (k) reduce the percentage of
aggregate principal amount of outstanding Notes necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults, (l) reduce the percentage in aggregate principal amount of outstanding
Notes required for the adoption of a resolution or the quorum required at any
meeting of Holders of Notes at which a resolution is adopted, or (m) modify the
obligation of the Company to deliver information required under Rule 144A to
permit resales of Notes and Common Stock issuable upon conversion thereof in the
event the Company ceases to be subject to certain reporting requirements under
the United States securities laws. The quorum at any meeting called to adopt a
resolution will be persons holding or representing a majority in aggregate
principal amount of the Notes at the time outstanding and, at any reconvened
meeting adjourned for lack of a quorum, 25% of such aggregate principal amount.
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The Holders of a majority in aggregate principal amount of the outstanding
Notes may waive compliance by the Company with certain restrictive provisions of
the Indenture by written consent or by the adoption of a resolution at a
meeting. The Holders of a majority in aggregate principal amount of the
outstanding Notes also may waive any past default under the Indenture, except a
default in the payment of principal, premium, if any, or interest, by written
consent.
TITLE
The Company, the Trustee, any Paying Agent and any Conversion Agent may
treat the registered owner (as reflected in the security register) of any Note
as the absolute owner thereof (whether or not such Note shall be overdue) for
the purpose of making payment and for all other purposes.
NOTICES
Notice to Holders of the Notes will be given by mail to the addresses of
such Holders as they appear in the Security Register. Such notices will be
deemed to have been given on the date of such mailing.
Notice of a redemption of Notes will be given at least once not less than
30 nor more than 60 days prior to the redemption date (which notice shall be
irrevocable) and will specify the Redemption Date.
REPLACEMENT OF NOTES
Notes that become mutilated, destroyed, stolen or lost will be replaced by
the Company at the expense of the Holder upon delivery to the Trustee of the
mutilated Notes or evidence of the loss, theft or destruction thereof
satisfactory to the Company and the Trustee. In the case of a lost, stolen or
destroyed Note, indemnity satisfactory to the Trustee and the Company may be
required at the expense of the Holder of such Note before a replacement Note
will be issued.
GOVERNING LAW
The Indenture and the Notes are governed by and construed in accordance
with the laws of the State of New York, United States of America.
THE TRUSTEE
In case an event of default shall occur (and shall not be cured), the
trustee will be required to use the degree of care of a prudent person in the
conduct of his own affairs in the exercise of its powers. Subject to such
provisions, the trustee will be under no obligation to exercise any of its
rights or powers under the indenture at the request of any of the holders of
notes, unless they shall have offered to the trustee reasonable security or
indemnity.
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PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale from time to time by the
holders of Notes of an aggregate amount of up to $250,000,000 and Shares
issuable upon conversion of such Notes. The Notes were issued in a private
placement, and this Prospectus has been prepared in connection with registering
the Notes and Shares to allow for sales of Notes and Shares by the applicable
Selling Securityholders to the public in accordance with the terms of the
Noteholders Registration Rights Agreement. The Company has registered these
Securities for sale pursuant to the terms of the Noteholders Registration Rights
Agreement, but registration of such Securities does not necessarily mean that
any of such Securities will be offered and sold by the holders thereof.
The Company will not receive any proceeds from the offering by the Selling
Securityholders. The Securities may be sold from time to time to purchasers
directly by any of the Selling Securityholders. Alternatively, the Selling
Securityholders may from time to time offer the Securities through dealers or
agents, who may receive compensation in the form of commissions from the Selling
Securityholders and/or the purchasers of Securities for whom they may act as
agent. The Selling Securityholders and any dealers or agents that participate in
the distribution of Securities may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of Securities by them
and any commissions received by any such dealers or agents might be deemed to be
underwriting commissions under the Securities Act.
At a time a particular offer of Securities is made, a Prospectus
Supplement, if required, will be distributed that will set forth the name and
names of any dealers or agents and any commissions and other terms constituting
compensation from the Selling Securityholders and any other required
information. The Securities may be sold from time to time at varying prices
determined at the time of sale or at negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the Securities may be sold only through registered or licensed
brokers or dealers. In addition, in certain states, the Securities may not be
sold unless they have been registered or qualified for sale in such state or an
exemption from such registration or qualification requirement is available and
is complied with.
The Securities may also be sold in one or more of the following
transactions: (a) block transactions (which may involve crosses) in which a
broker-dealer may sell all or a portion of such Securities as agent but may
position and resell all or a portion of the block as principal to facilitate the
transaction; (b) purchases by any such broker-dealer as principal and resale by
such broker-dealer for its own account pursuant to a Prospectus Supplement; (c)
ordinary brokerage transactions and transactions in which any such broker-dealer
solicits purchasers; (d) sales "at the market" to or through a market maker or
into an existing trading market, on an exchange or otherwise, for such
Securities; and (e) sales in other ways not involving market makers or
established trading markets, including direct sales to purchasers. In effecting
sales, broker-dealers engaged by the Selling Securitiesholders may arrange for
other broker-dealers to participate.
EXPERTS
The consolidated financial statements of BEA Systems, appearing in BEA
Systems, Inc.'s annual report on Form 10-KSB for the year ended January 31, 1998
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon, included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the issuance of the securities offered pursuant to this
Prospectus will be passed upon for the Company by Morrison & Foerster LLP,
Palo Alto, California. Certain attorneys at Morrison & Foerster LLP own an
aggregate of 34,500 shares of Common Stock of the Company.
33
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other expenses of Issuance and Distribution
The following table sets forth the estimated fees and expenses payable by
the Company in connection with the issuance and distribution of the Common Stock
registered hereby. All of such fees and expenses are estimates, except the
Securities Act registration fee.
Securities Act Registration Fee........................... $ 73,750
Printing and duplicating fees............................. 10,000
Legal fees and expenses................................... 15,000
Accounting fees and expenses.............................. 10,000
Miscellaneous expenses.................................... 5,000
---------
*Total.................................................. $ 113,750
=========
* None of the expenses listed above will be borne by the Selling
Securityholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the General Corporate Law of the State of Delaware,
the Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). The Registrant's
Amended and Restated Bylaws also provide for mandatory indemnification of its
directors and executive officers, and permissive indemnification of its
employees and agents, to the fullest extent permissible under Delaware law.
The Registrant's Amended and Restated Certificate of Incorporation provides
that the liability of its directors for monetary damages shall be eliminated to
the fullest extend permissible under Delaware law. Pursuant to Delaware law,
this includes elimination of liability for monetary damages for breach of the
directors' fiduciary duty of care to the Registrant and its Stockholders. These
provisions do not eliminate the directors' duty of care and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of non-
monetary relief will remain available under Delaware law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to the Registrant, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for any
transaction from which the director derived an improper personal benefit, and
for payment of dividends or approval of stock repurchases or redemptions that
are unlawful under Delaware law. The provision also does not affect a
director's responsibilities under any other laws, such as the securities laws or
state or federal environmental laws. The Registrant maintains a policy of
directors' and officers' liability insurance that insures the Company's
directors and officers against the cots of defense, settlement or payment of a
judgment under certain circumstances.
Pursuant to written agreement between the respective Selling
Securityholders and the Company, the directors and officers of the Company are
indemnified by such Selling Securityholders against certain civil liabilities
that they may incur under the Securities Act in connection with this
Registration Statement and the related Prospectus.
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ITEM 16. EXHIBITS
4.1 - Restated Certificate of Incorporation of the Registrant (incorporated
by reference to Exhibit 3.1 to Registrant's Registration Statement
on Form SB-2 (File No. 333-20791))
4.2 - Bylaws of the Registrant (incorporated by reference to Exhibit 3.3 to
Registrant's Registration Statement on Form SB-2
(File No. 333-20791))
4.3 - Form of Indenture Agreement
4.4 - Form of Promissory Note
4.5 - Form of Purchase Agreement
4.6 - Form of Registration Rights Agreement
5.1 - Opinion of Morrison & Foerster LLP
12.1 - Computation of Ratio of Earnings to Fixed Charges
23.1 - Consent of Ernst & Young LLP, Independent Auditors
23.2 - Consent of Morrison & Foerster LLP (included in Exhibit 5.1)
24.1 - Power of Attorney (included on signature page hereto)
25.1 - Statement of Eligibility of Trustee
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 this
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) any
deviation from the low or high and of the estimated maximum offering price
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate changes in volume and price
represent no more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this registration statement.
(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 herein, 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 these securities being registered which remain unsold at the termination
of the offering.
The undersigned Registrant hereby further undertakes that, for the purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual reports pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, when 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 to this
II-2
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registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance under Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 of this
registration statement, or otherwise (other than insurance), the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in such Act and will be governed by the final adjudication
of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 Sunnyvale, State of California on September 9, 1998.
BEA SYSTEMS, INC.
By: /S/ WILLIAM T. COLEMAN III
-----------------------------------
President, Chief Executive Officer
and Chairman of the Board
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints William T. Coleman, III and
Steve L. Brown as his/her true and lawful attorneys-in-fact and agents, jointly
and severally, with full power of substitution and resubstitution, for and in
his/her stead, in any and all capacities, to sign on his/her behalf the
Registration Statement on Form S-3 in connection with the sale by BEA Systems,
Inc. of shares of offered securities, and to execute any amendments thereto
(including post-effective amendments) or certificates that may be required in
connection with this Registration Statement, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission and granting unto said attorneys-in-fact and
agents, jointly and severally, the full power and authority to do and perform
each and every act and thing necessary or advisable to all intents and purposes
as he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, jointly and severally, or his/her 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 on Form S-3 has been signed by the following persons in the capacities
and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ WILLIAM T. COLEMAN III
- ----------------------------------- President, Chief Executive Officer, Chairman of the September 9, 1998
William T. Coleman III Board and Director (Principal Executive Officer)
/s/ EDWARD W. SCOTT, JR.
- ----------------------------------- Executive Vice President of Worldwide Field September 9, 1998
Edward W. Scott, Jr. Operations, Assistant Secretary and Director
/s/ STEVE L. BROWN
- ----------------------------------- Executive Vice President, Chief Financial Officer and September 9, 1998
Steve L. Brown Secretary (Principal Financial and Accounting Officer)
/s/ CAROL A. BARTZ
- ----------------------------------- Director September 9, 1998
Carol A. Bartz
/s/ CARY J. DAVIS
- ----------------------------------- Director September 9, 1998
Cary J. Davis
/s/ STEWART K.P. GROSS
- ----------------------------------- Director September 9, 1998
Stewart K.P. Gross
/s/ WILLIAM H. JANEWAY
- ----------------------------------- Director September 9, 1998
William H. Janeway
/s/ DEAN O. MORTON
- ----------------------------------- Director September 9, 1998
Dean O. Morton
</TABLE>
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INDEX TO EXHIBITS
4.1 - Restated Certificate of Incorporation of the Registrant (incorporated
by reference to Exhibit 3.1 to Registrant's Registration Statement
on Form SB-2 (File No. 333-20791))
4.2 - Bylaws of the Registrant (incorporated by reference to Exhibit 3.3 to
Registrant's Registration Statement on Form SB-2
(File No. 333-20791))
4.3 - Form of Indenture Agreement
4.4 - Form of Promissory Note
4.5 - Form of Purchase Agreement
4.6 - Form of Registration Rights Agreement
5.1 - Opinion of Morrison & Foerster LLP
12.1 - Computation of Ratio of Earnings to Fixed Charges
23.1 - Consent of Ernst & Young LLP, Independent Auditors
23.2 - Consent of Morrison & Foerster LLP (included in Exhibit 5.1)
24.1 - Power of Attorney (included on signature page hereto)
25.1 - Statement of Eligibility of Trustee
<PAGE>
Exhibit 4.3
____________________________________
BEA SYSTEMS, INC.
ISSUER
TO
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
TRUSTEE
__________________
INDENTURE
Dated as of June 1, 1998
___________________
4% CONVERTIBLE SUBORDINATED NOTES DUE JUNE 15, 2005
____________________________________
<PAGE>
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION................................................. 1
SECTION 1.1 Definitions.................................................................................... 1
SECTION 1.2 Compliance Certificates And Opinions........................................................... 10
SECTION 1.3 Form of Documents Delivered to The Trustee..................................................... 11
SECTION 1.4 Acts of Holders of Securities.................................................................. 12
SECTION 1.5 Notices, Etc. to Trustee and Company........................................................... 14
SECTION 1.6 Notice to Holders of Securities; Waiver........................................................ 14
SECTION 1.7 Effect of Headings and Table of Contents....................................................... 15
SECTION 1.8 Successors and Assigns......................................................................... 15
SECTION 1.9 Separability Clause............................................................................ 15
SECTION 1.10 Benefits of Indenture.......................................................................... 15
SECTION 1.11 Governing Law.................................................................................. 15
SECTION 1.12 Legal Holidays................................................................................. 15
SECTION 1.13 Conflict With Trust Indenture Act.............................................................. 16
ARTICLE II SECURITY FORMS.......................................................................................... 16
SECTION 2.1 Form Generally................................................................................. 16
SECTION 2.2 Form of Security............................................................................... 17
SECTION 2.3 Form of Certificate of Authentication.......................................................... 30
SECTION 2.4 Form of Conversion Notice...................................................................... 31
SECTION 2.5 Form of Assignment............................................................................. 32
ARTICLE III THE SECURITIES......................................................................................... 33
SECTION 3.1 Title and Terms................................................................................ 33
SECTION 3.2 Denominations.................................................................................. 34
SECTION 3.3 Execution, Authentication, Delivery and Dating................................................. 34
SECTION 3.4 Global Securities; Non-global Securities; Book-entry Provisions................................ 34
SECTION 3.5 Registration; Registration of Transfer and Exchange; Restrictions on
Transfer....................................................................................... 36
SECTION 3.6 Mutilated, Destroyed, Lost or Stolen Securities................................................ 39
SECTION 3.7 Payment of Interest; Interest Rights Preserved................................................. 40
SECTION 3.8 Persons Deemed Owners.......................................................................... 41
SECTION 3.9 Cancellation................................................................................... 41
SECTION 3.10 Computation of Interest........................................................................ 42
SECTION 3.11 Cusip Numbers.................................................................................. 42
ARTICLE IV SATISFACTION AND DISCHARGE.............................................................................. 42
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SECTION 4.1 Satisfaction And Discharge of Indenture........................................................ 42
SECTION 4.2 Application of Trust Money..................................................................... 43
ARTICLE V REMEDIES................................................................................................ 44
SECTION 5.1 Events of Default.............................................................................. 44
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment............................................. 46
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee................................ 47
SECTION 5.4 Trustee May File Proofs of Claim............................................................... 47
SECTION 5.5 Trustee May Enforce Claims Without Possession of Securities.................................... 48
SECTION 5.6 Application of Money Collected................................................................. 48
SECTION 5.7 Limitation on Suits............................................................................ 49
SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert........................................................................ 49
SECTION 5.9 Restoration of Rights and Remedies............................................................. 50
SECTION 5.10 Rights and Remedies Cumulative................................................................. 50
SECTION 5.11 Delay or Omission Not Waiver................................................................... 50
SECTION 5.12 Control by Holders of Securities............................................................... 50
SECTION 5.13 Waiver of Past Defaults........................................................................ 51
SECTION 5.14 Undertaking for Costs.......................................................................... 51
SECTION 5.15 Waiver of Stay, Usury or Extension Laws........................................................ 51
ARTICLE VI THE TRUSTEE............................................................................................. 52
SECTION 6.1 Certain Duties and Responsibilities............................................................ 52
SECTION 6.2 Notice of Defaults............................................................................. 53
SECTION 6.3 Certain Rights of Trustee...................................................................... 53
SECTION 6.4 Not Responsible for Recitals or Issuance of Securities......................................... 54
SECTION 6.5 May Hold Securities, Act as Trustee under Other Indentures..................................... 54
SECTION 6.6 Money Held in Trust............................................................................ 55
SECTION 6.7 Compensation and Reimbursement................................................................. 55
SECTION 6.8 Corporate Trustee Required; Eligibility........................................................ 56
SECTION 6.9 Resignation and Removal; Appointment of Successor.............................................. 56
SECTION 6.10 Acceptance of Appointment by Successor......................................................... 57
SECTION 6.11 Merger, Conversion, Consolidation or Succession to Business.................................... 58
SECTION 6.12 Authenticating Agents.......................................................................... 58
SECTION 6.13 Disqualification; Conflicting Interests........................................................ 59
SECTION 6.14 Preferential Collection of Claims Against Company.............................................. 59
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ARTICLE VII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE....................................................60
SECTION 7.1 Company May Consolidate, Etc., Only on Certain Terms............................................60
SECTION 7.2 Successor Substituted...........................................................................60
ARTICLE VIII SUPPLEMENTAL INDENTURES................................................................................61
SECTION 8.1 Supplemental Indentures Without Consent of Holders of Securities ...............................61
SECTION 8.2 Supplemental Indentures with Consent of Holders of Securities...................................62
SECTION 8.3 Execution of Supplemental Indentures............................................................63
SECTION 8.4 Effect of Supplemental Indentures...............................................................63
SECTION 8.5 Reference in Securities to Supplemental Indentures..............................................63
SECTION 8.6 Notice of Supplemental Indentures...............................................................63
ARTICLE IX MEETINGS OF HOLDERS OF SECURITIES.......................................................................64
SECTION 9.1 Purposes for Which Meetings May Be Called.......................................................64
SECTION 9.2 Call, Notice and Place of Meetings..............................................................64
SECTION 9.3 Persons Entitled to Vote at Meetings............................................................64
SECTION 9.4 Quorum; Action..................................................................................64
SECTION 9.5 Determination of Voting Rights; Conduct and Adjournment of
Meetings........................................................................................65
SECTION 9.6 Counting Votes and Recording Action of Meetings.................................................66
ARTICLE X COVENANTS................................................................................................66
SECTION 10.1 Payment of Principal, Premium and Interest......................................................66
SECTION 10.2 Maintenance of Offices or Agencies..............................................................67
SECTION 10.3 Money for Security Payments to Be Held in Trust.................................................67
SECTION 10.4 Existence.......................................................................................68
SECTION 10.5 Maintenance of Properties.......................................................................69
SECTION 10.6 Payment of Taxes and Other Claims...............................................................69
SECTION 10.7 Registration and Listing........................................................................69
SECTION 10.8 Statement by Officers as to Default.............................................................70
SECTION 10.9 Delivery of Certain Information.................................................................70
SECTION 10.10 Resale of Certain Securities....................................................................71
SECTION 10.11 Registration Rights.............................................................................71
SECTION 10.12 Waiver of Certain Covenants.....................................................................72
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ARTICLE XI REDEMPTION OF SECURITIES.................................................................................73
SECTION 11.1 Right of Redemption.............................................................................73
SECTION 11.2 Applicability of Article........................................................................73
SECTION 11.3 Election to Redeem; Notice to Trustee...........................................................73
SECTION 11.4 Selection by Trustee of Securities to Be Redeemed...............................................73
SECTION 11.5 Notice of Redemption............................................................................74
SECTION 11.6 Deposit of Redemption Price.....................................................................75
SECTION 11.7 Securities Payable on Redemption Date...........................................................75
SECTION 11.8 Conversion Arrangement on Call for Redemption...................................................76
ARTICLE XII CONVERSION OF SECURITIES................................................................................76
SECTION 12.1 Conversion Privilege and Conversion Rate........................................................76
SECTION 12.2 Exercise of Conversion Privilege................................................................77
SECTION 12.3 Fractions of Shares.............................................................................78
SECTION 12.4 Adjustment of Conversion Rate...................................................................79
SECTION 12.5 Notice of Adjustments of Conversion Rate........................................................83
SECTION 12.6 Notice of Certain Corporate Action..............................................................84
SECTION 12.7 Company to Reserve Common Stock.................................................................85
SECTION 12.8 Taxes on Conversions............................................................................85
SECTION 12.9 Covenant as to Common Stock.....................................................................85
SECTION 12.10 Cancellation of Converted Securities............................................................85
SECTION 12.11 Provision in Case of Consolidation, Merger or Sale of Assets....................................86
SECTION 12.12 Rights Issued in Respect of Common Stock........................................................87
SECTION 12.13 Responsibility of Trustee for Conversion Provisions.............................................87
ARTICLE XIII SUBORDINATION OF SECURITIES............................................................................88
SECTION 13.1 Securities Subordinate to Senior Indebtedness...................................................88
SECTION 13.2 No Payment in Certain Circumstances, Payment over of Proceeds upon
Dissolution, Etc................................................................................88
SECTION 13.3 Prior Payment to Senior Indebtedness upon Acceleration of
Securities......................................................................................90
SECTION 13.4 Payment Permitted If No Default.................................................................90
SECTION 13.5 Subrogation to Rights of Holders of Senior Indebtedness.........................................91
SECTION 13.6 Provisions Solely to Define Relative Rights.....................................................91
SECTION 13.7 Trustee to Effectuate Subordination.............................................................91
SECTION 13.8 No Waiver of Subordination Provisions...........................................................92
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SECTION 13.9 Notice to Trustee...............................................................................92
SECTION 13.10 Reliance on Judicial Order or Certificate of Liquidating Agent..................................93
SECTION 13.11 Trustee Not Fiduciary for Holders of Senior Indebtedness........................................93
SECTION 13.12 Reliance by Holders of Senior Indebtedness on Subordination
Provisions......................................................................................93
SECTION 13.13 Rights of Trustee as Holder of Senior Indebtedness; Preservation of
Trustee's Rights................................................................................94
SECTION 13.14 Article Applicable to Paying Agents.............................................................94
SECTION 13.15 Certain Conversions and Repurchases Deemed Payment..............................................94
ARTICLE XIV- REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER UPON A CHANGE IN CONTROL...........................95
SECTION 14.1 Right to Require Repurchase.....................................................................95
SECTION 14.2 Conditions to the Company's Election to Pay the Repurchase Price in
Common Stock....................................................................................95
SECTION 14.3 Notices; Method of Exercising Repurchase Right, Etc.............................................96
SECTION 14.4 Certain Definitions.............................................................................99
SECTION 14.5 Consolidation, Merger, etc.....................................................................100
ARTICLE XV- HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY; NON-RECOURSE .........................................101
SECTION 15.1 Company to Furnish Trustee Names and Addresses of Holders......................................101
SECTION 15.2 Preservation of Information....................................................................101
SECTION 15.3 Reserved.......................................................................................102
SECTION 15.4 Reports by Trustee.............................................................................102
SECTION 15.5 Reports by Company.............................................................................102
ARTICLE XVI IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS .......................................102
SECTION 16.1 Indenture and Securities Solely Corporate Obligations..........................................102
</TABLE>
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INDENTURE, dated as of June 1, 1998, between BEA SYSTEMS, INC., a
corporation duly organized and existing under the laws of the State of Delaware,
having its principal office at 385 Moffett Park Drive, Sunnyvale, California
94089 (herein called the "Company"), and STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., a national banking association, as Trustee hereunder (herein
called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 4%
Convertible Subordinated Notes due June 15, 2005 (herein called the
"Securities") of substantially the tenor and amount hereinafter set forth, and
to provide therefor the Company has duly authorized the execution and delivery
of this Indenture.
All things necessary to make the Securities, when the Securities are
executed by the Company and authenticated and delivered hereunder, the valid
obligations of the Company, and to make this Indenture a valid agreement of the
Company, in accordance with their and its terms, have been done. Further, all
things necessary to duly authorize the issuance of the Common Stock of the
Company issuable upon the conversion of the Securities, and to duly reserve for
issuance the number of shares of Common Stock issuable upon such conversion,
have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 Definitions
-----------
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular;
(2) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation; and
<PAGE>
(3) the words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
"Act", when used with respect to any Holder of a Security, has the meaning
specified in Section 1.4.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of The Depository Trust Company, in each case to the extent
applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized pursuant to Section 6.12
to act on behalf of the Trustee to authenticate Securities.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a resolution duly adopted by the Board of
Directors, a copy of which, certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, shall have been
delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, Place of
Conversion or any other place, as the case may be, means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in such Place of Payment, Place of Conversion or other place, as the case may
be, are authorized or obligated by law or executive order to close; provided,
however, that a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close shall not be a
Business Day for purposes of Section 13.9.
"Change in Control" has the meaning specified in Section 14.4(2).
"Closing Price Per Share" means, with respect to the Common Stock, for any
day, (i) the last reported bid price regular way on the Nasdaq National Market
or, (ii) if the Common Stock is not quoted on the Nasdaq National Market, the
last reported sale price regular way per share or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
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prices regular way, in either case, on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or (iii) if
the Common Stock is not quoted on the Nasdaq National Market or listed or
admitted to trading on any national securities exchange, the average of the
closing bid prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by the Company for that
purpose.
"Code" has the meaning specified in Section 2.l.
"Commission" means the United States Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" means the Common Stock, par value $0.001 per share, of the
Company authorized at the date of this instrument as originally executed.
Subject to the provisions of Section 12.11, shares issuable on conversion or
repurchase of Securities shall include only shares of Common Stock or shares of
any class or classes of common stock resulting from any reclassification or
reclassifications thereof; provided, however, that if at any time there shall be
more than one such resulting class, the shares so issuable on conversion of
Securities shall include shares of all such classes, and the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.
"common stock" includes any stock of any class of capital stock 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 issuer
thereof and which is not subject to redemption by the issuer thereof.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Notice" has the meaning specified in Section 14.3.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its (i) Chairman of the Board, its Vice
Chairman of the Board, its Chief Executive Officer, its President, an Executive
Vice President or a Vice President, and by its (ii) Principal financial officer,
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Constituent Person" has the meaning specified in Section 12.11.
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"Conversion Agent" means any Person authorized by the Company to convert
Securities in accordance with Article XII. The Company has initially appointed
the Trustee as its Conversion Agent pursuant to Section 10.2 hereof.
"Conversion Price" has the meaning specified in Section 14.4(3).
"Conversion Rate" has the meaning specified in Section 12.1.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time the trust created by this Indenture shall be principally
administered (which at the date of this Indenture is located at 633 West 5th
Street, 12th Floor, Los Angeles, California 90071, Attention: Corporate Trust
Administration (BEA Systems, Inc., 4% Convertible Subordinated Notes due June
15, 2005)).
"corporation" means a corporation, company, association, joint-stock
company or business trust.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depositary" means, with respect to any Securities (including any Global
Securities), a clearing agency that is registered as such under the Exchange Act
and is designated by the Company to act as Depositary for such Securities (or
any successor securities clearing agency so registered).
"Designated Senior Debt" means the Company's obligations under any
particular Senior Indebtedness in which the instrument creating or evidencing
the same or the assumption or guarantee thereof (or related agreements or
documents to which the Company is a party) expressly provides that such Senior
Indebtedness shall be "Designated Senior Debt" for purposes of this Indenture
(provided that such instrument, agreement or other document may place
limitations and conditions on the right of such Senior Indebtedness to exercise
the rights of Designated Senior Debt).
"Distribution Date" shall mean the "Distribution Date" as such term is
defined in the Rights Agreement.
"Dollar" or "U.S. $" means a dollar or other equivalent unit in such coin
or currency of the United States as at the time shall be legal tender for the
payment of public and private debts.
"DTC" means The Depository Trust Company, a New York corporation.
"Effective Failure" has the meaning specified in Section 10.11.
"Effectiveness Period" has the meaning specified in Section 10.11.
"Event of Default" has the meaning specified in Section 5.1.
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"Exchange Act" means the United States Securities Exchange Act of 1934 (or
any successor statute), as amended from time to time.
"Global Security" means a Security that is registered in the Security
Register in the name of a Depositary or a nominee thereof.
"Holder" means the Person in whose name the Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively.
"Initial Purchasers" means Goldman, Sachs & Co., BancAmerica Robertson
Stephens, BT Alex. Brown Incorporated, Deutsche Bank Securities Inc. and
SoundView Financial Group, Inc.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Issue Date" means June 12, 1998.
"Liquidated Damages" has the meaning specified in Section 10.11.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption, exercise of the repurchase right set forth in Article XIV or
otherwise.
"Non-electing Share" has the meaning specified in Section 12.11.
"Notice of Default" has the meaning specified in Section 5.1.
"Officers' Certificate" means a certificate signed by (i) the Chairman of
the Board, a Vice Chairman of the Board, the Chief Executive Officer, the
President, an Executive Vice President or a Vice President and by (ii) the
principal financial officer, the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company and who shall be acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
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(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for the payment or redemption of which money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities, provided that if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
(iii) Securities which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company; and
(iv) Securities converted into Common Stock pursuant to Article XII;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities are present at a meeting of Holders
of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such determination as to the presence of a quorum or upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Securities which a Responsible Officer of the Trustee has been notified in
writing to be so owned shall be so disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee is not
the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor, and the Trustee shall be protected in relying
upon an Officer's Certificate to such effect.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company and, except
as otherwise specifically set forth herein, such term shall include the Company
if it shall act as its own Paying Agent. The Company has initially appointed the
Trustee as its Paying Agent pursuant to Section 10.2 hereof.
"Payment Blockage Notice" has the meaning specified in Section 13.2.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Conversion" has the meaning specified in Section 3.1.
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"Place of Payment" has the meaning specified in Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Purchase Agreement" means the Purchase Agreement, dated as of June 8,
1998, between the Company and the Initial Purchasers, as such agreement may be
amended from time to time.
"Qualified Institutional Buyer" shall mean a "qualified institutional
buyer" as defined in Rule 144A.
"Record Date" means any Regular Record Date or Special Record Date.
"Record Date Period" means the period from the close of business of any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registrable Securities" has the meaning specified in Section 10.11.
"Registration Default" has the meaning specified in Section 10.11.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of June 1, 1998, between the Company and the Initial Purchasers, as
such agreement may be amended from time to time.
"Regular Record Date" for interest payable in respect of any Security on
any Interest Payment Date means the June 1 or December 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
"Representative" means the (a) indenture trustee or other trustee, agent or
representative for any Senior Indebtedness or (b) with respect to any Senior
Indebtedness that does not have any such trustee, agent or other representative,
(i) in the case of such Senior Indebtedness issued pursuant to an agreement
providing for voting arrangements as among the holders or owners of such Senior
Indebtedness, any holder or owner of such Senior Indebtedness acting with the
consent of the
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required persons necessary to bind such holders or owners of such Senior
Indebtedness and (ii) in the case of all other such Senior Indebtedness, the
holder or owner of such Senior Indebtedness.
"Repurchase Date" has the meaning specified in Section 14.1.
"Repurchase Price" has the meaning specified in Section 14.1.
"Responsible Officer", when used with respect to the Trustee, means any
officer within the Corporate Trust Office of the Trustee with direct
responsibility for the administration of this Indenture and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge and familiarity with the particular
subject.
"Restricted Global Security" has the meaning specified in Section 2.1.
"Restricted Securities" means all Securities required pursuant to Section
3.5(3) to bear any Restricted Securities Legend. Such term includes the
Restricted Global Security.
"Restricted Securities Certificate" means a certificate substantially in
the form set forth in Annex A.
"Restricted Securities Legend" means, collectively, the legends
substantially in the forms of the legends required in the form of Security set
forth in Section 2.2 to be placed upon each Restricted Security.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Rule 144A Information" has the meaning specified in Section 10.9.
"Securities" has the meaning ascribed to it in the first paragraph under
the caption "Recitals of the Company".
"Securities Act" means the United States Securities Act of 1933 (or any
successor statute), as amended from time to time.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 3.5.
"Senior Indebtedness" means the principal of (and premium, if any) and
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on, and all fees and
other amounts payable in connection with, the following, whether absolute or
contingent, secured or unsecured, due or to become due, outstanding on the date
of this Indenture or thereafter created, incurred or assumed: (a) indebtedness
of the Company evidenced by a credit or loan
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agreement, note, bond, debenture or other written obligation, (b) all
obligations of the Company for money borrowed, (c) all obligations of the
Company evidenced by a note or similar instrument given in connection with the
acquisition of any businesses, properties or assets of any kind, (d) obligations
of the Company (i) as lessee under leases required to be capitalized on the
balance sheet of the lessee under generally accepted accounting principles and
(ii) as lessee under other leases for facilities, capital equipment or related
assets, whether or not capitalized, entered into or leased for financing
purposes, (e) all obligations of the Company under interest rate and currency
swaps, caps, floors, collars, hedge agreements, forward contracts or similar
agreements or arrangements, (f) all obligations of the Company with respect to
letters of credit, bankers' acceptances and similar facilities (including
reimbursement obligations with respect to the foregoing), (g) all obligations of
the Company issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable and accrued liabilities arising
in the ordinary course of business), (h) all obligations of the type referred to
in clauses (a) through (g) above of another Person and all dividends of another
Person, the payment of which, in either case, the Company has assumed or
guaranteed, or for which the Company is responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or otherwise, or which
is secured by a lien on the property of the Company, and (i) renewals,
extensions, modifications, replacements, restatements and refundings of, or any
indebtedness or obligation issued in exchange for, any such indebtedness or
obligation described in clauses (a) through (h) of this paragraph; provided,
however, that Senior Indebtedness shall not include the Securities or any such
indebtedness or obligation if the terms of such indebtedness or obligation (or
the terms of the instrument under which, or pursuant to which it is issued)
expressly provide that such indebtedness or obligation is not superior in right
of payment to the Securities.
"Shelf Registration Statement" has the meaning specified in Section 10.11.
"Significant Subsidiary" means, with respect to any Person, a Subsidiary of
such Person that would constitute a "significant subsidiary" as such term is
defined under Rule 1-02 of Regulation S-X under the Securities Act and the
Exchange Act.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Company pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock or other similar
interests in the corporation which ordinarily has or have voting power for the
election of directors, or persons performing similar functions, whether at all
times or only so long as no senior class of stock or other interests has or have
such voting power by reason of any contingency.
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"Successor Security" of any particular Security means every Security issued
after, and evidencing all or a portion of the same debt as that evidenced by,
such particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Surrender Certificate" means a certificate substantially in the form set
forth in Annex C.
"Trading Day" means (i) if the Common Stock is quoted on the Nasdaq
National Market or any other system of automated dissemination of quotations of
securities prices, days on which trades may be effected through such system,
(ii) if the Common Stock is listed or admitted for trading on any national or
regional securities exchange, days on which such national or regional securities
exchange is open for business, or (iii) if the Common Stock is not listed on a
national or regional securities exchange or quoted on the Nasdaq National Market
or any other system of automated dissemination of quotation of securities
prices, days on which the Common Stock is traded regular way in the over-the-
counter market and for which a closing bid and a closing asked price for the
Common Stock are available.
"Trust Indenture Act" means the Trust Indenture Act of 1939, and the rules
and regulations thereunder, as in force at the date as of which this instrument
was executed, provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939, and the rules
and regulations thereunder, as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"United States" means the United States of America (including the States
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction (its "possessions" including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands).
"Unrestricted Securities Certificate" means a certificate substantially in
the form set forth in Annex B.
SECTION 1.2 Compliance Certificates And Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any
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provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (including certificates provided for in
Section 10.8) shall include:
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
SECTION 1.3 Form of Documents Delivered to The Trustee.
------------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company or any other Person
stating that the information with respect to such factual matters is in the
possession of the Company or such other Person, unless such counsel knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
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SECTION 1.4 Acts of Holders of Securities.
-----------------------------
(1) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders of Securities may be embodied in and evidenced by (A) one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent or proxy duly appointed in writing by such Holders or (B) the record
of Holders of Securities voting in favor thereof, either in person or by proxies
duly appointed in writing, at any meeting of Holders of Securities duly called
and held in accordance with the provisions of Article IX. Such action shall
become effective when such instrument or instruments or record is delivered to
the Trustee and, where it is hereby expressly required, to the Company. The
Trustee shall promptly deliver to the Company copies of all such instruments and
records delivered to the Trustee. Such instrument or instruments and records
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders of Securities signing such instrument or
instruments and so voting at such meeting. Proof of execution of any such
instrument or of a writing appointing any such agent or proxy, or of the holding
by any Person of a Security, shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and
the Company if made in the manner provided in this Section. The record of any
meeting of Holders of Securities shall be proved in the manner provided in
Section 9.6.
(2) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority.
(3) The principal amount and serial number of any Security held by any
Person, and the date of his holding the same, shall be proved by the Security
Register.
(4) The fact and date of execution of any such instrument or writing and
the authority of the Person executing the same may also be proved in any other
manner which the Trustee deems sufficient; and the Trustee may in any instance
require further proof with respect to any of the matters referred to in this
Section 1.4.
(5) The Company may set any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted by this Indenture to be given or taken by
Holders. Promptly and in any case not later than ten days after setting a record
date, the Company shall notify the Trustee and the Holders of such record date.
If not set by the Company prior to the first solicitation of a Holder made by
any Person in respect of any such action, or, in the case of any such vote,
prior to such vote, the record date for any such action or vote shall be the
30th day (or, if later, the date of the most recent list of Holders required to
be provided pursuant to Section 15.1) prior to such first solicitation or vote,
as the case may be. With regard to any record date, the Holders on such date (or
their duly appointed agents or proxies), and only such Persons,
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shall be entitled to give or take, or vote on, the relevant action, whether or
not such Holders remain Holders after such record date. Notwithstanding the
foregoing, the Company shall not set a record date for, and the provisions of
this paragraph shall not apply with respect to, any notice, declaration or
direction referred to in the next paragraph.
Upon receipt by the Trustee from any Holder of (i) any notice of default or
breach referred to in Section 5.1(4), if such default or breach has occurred and
is continuing and the Trustee shall not have given such a notice to the Company,
(ii) any declaration of acceleration referred to in Section 5.2, if an Event of
Default has occurred and is continuing and the Trustee shall not have given such
a declaration to the Company, or (iii) any direction referred to in Section
5.12, if the Trustee shall not have taken the action specified in such
direction, then, with respect to clauses (ii) and (iii), a record date shall
automatically and without any action by the Company or the Trustee be set for
determining the Holders entitled to join in such declaration or direction, which
record date shall be the close of business on the tenth day (or, if such day is
not a Business Day, the first Business Day thereafter) following the day on
which the Trustee receives such declaration or direction, and, with respect to
clause (i), the Trustee may set any day as a record date for the purpose of
determining the Holders entitled to join in such notice of default. Promptly
after such receipt by the Trustee of any such declaration or direction referred
to in clause (ii) or (iii), and promptly after setting any record date with
respect to clause (i), and as soon as practicable thereafter, the Trustee shall
notify the Company and the Holders of any such record date so fixed. The Holders
on such record date (or their duly appointed agents or proxies), and only such
Persons, shall be entitled to join in such notice, declaration or direction,
whether or not such Holders remain Holders after such record date; provided
that, unless such notice, declaration or direction shall have become effective
by virtue of Holders of the requisite principal amount of Securities on such
record date (or their duly appointed agents or proxies) having joined therein on
or prior to the 90th day after such record date, such notice, declaration or
direction shall automatically and without any action by any Person be canceled
and of no further effect. Nothing in this paragraph shall be construed to
prevent a Holder (or a duly appointed agent or proxy thereof) from giving,
before or after the expiration of such 90-day period, a notice, declaration or
direction contrary to or different from, or, after the expiration of such
period, identical to, the notice, declaration or direction to which such record
date relates, in which event a new record date in respect thereof shall be set
pursuant to this paragraph. In addition, nothing in this paragraph shall be
construed to render ineffective any notice, declaration or direction of the type
referred to in this paragraph given at any time to the Trustee and the Company
by Holders (or their duly appointed agents or proxies) of the requisite
principal amount of Securities on the date such notice, declaration or direction
is so given.
(6) Except as provided in Sections 5.12 and 5.13, any request, demand,
authorization, direction, notice, consent, election, waiver or other Act of the
Holder of any Security shall bind every future Holder of the same Security and
the Holder of every Security issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance thereon, whether
or not notation of such action is made upon such Security.
(7) The provisions of this Section 1.4 are subject to the provisions of
Section 9.5.
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SECTION 1.5 Notices, Etc. to Trustee and Company.
------------------------------------
Any request, demand, authorization, direction, notice, consent, election,
waiver or other Act of Holders of Securities or other document provided or
permitted by this Indenture to be made upon, given or furnished to, or filed
with,
(1) the Trustee by any Holder of Securities or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with a Responsible Officer of the Trustee and received at its
Corporate Trust Office, Attention: Corporate Trust Administration (BEA Systems,
Inc., 4% Convertible Subordinated Notes due June 15, 2005).
(2) the Company by the Trustee or by any Holder of Securities shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing, mailed, first-class postage prepaid, or telecopied and
confirmed by mail, first-class postage prepaid, or delivered by hand or
overnight courier, addressed to the Company at 385 Moffett Park Drive,
Sunnyvale, California 94089, Attention: General Counsel, or at any other
address previously furnished in writing to the Trustee by the Company.
SECTION 1.6 Notice to Holders of Securities; Waiver.
---------------------------------------
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities of any event, such notice shall be
sufficiently given to Holders if in writing and mailed, first-class postage
prepaid or delivered by an overnight delivery service, to each Holder of a
Security affected by such event, at the address of such Holder as it appears in
the Security Register, not earlier than the earliest date and not later than the
latest date prescribed for the giving of such notice.
Neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder of a Security shall affect the sufficiency of
such notice with respect to other Holders of Securities. In case by reason of
the suspension of regular mail service or by reason of any other cause it shall
be impracticable to give such notice by mail, then such notification to Holders
of Securities as shall be made with the approval of the Trustee, which approval
shall not be unreasonably withheld, shall constitute a sufficient notification
to such Holders for every purpose hereunder.
Such notice shall be deemed to have been given when such notice is mailed.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders of Securities shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
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<PAGE>
SECTION 1.7 Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.8 Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 1.9 Separability Clause.
-------------------
In case any provision in this Indenture or the Securities shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.10 Benefits of Indenture.
---------------------
Except as provided in the next sentence, nothing in this Indenture or in
the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors assigns hereunder and the Holders of
Securities, any benefit or legal or equitable right, remedy or claim under this
Indenture. The provisions of Article XIII are intended to be for the benefit
of, and shall be enforceable directly by, the holders of Senior Indebtedness.
SECTION 1.11 Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 1.12 Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date, Repurchase
Date or Stated Maturity of any Security or the last day on which a Holder of a
Security has a right to convert his Security shall not be a Business Day at a
Place of Payment or Place of Conversion, as the case may be, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of principal of, premium, if any, or interest on, or the payment of the
Repurchase Price (whether the same is payable in cash or in shares of Common
Stock) with respect to, or delivery for conversion of, such Security need not be
made at such Place of Payment or Place of Conversion, as the case may be, on or
by such day, but may be made on or by the next succeeding Business Day at such
Place of Payment or Place of Conversion, as the case may be, with the same force
and effect as if made on the Interest Payment Date, Redemption Date or
Repurchase Date, or at the Stated Maturity or by such last day for conversion;
provided, however, that in the case that payment is made on such succeeding
-15-
<PAGE>
Business Day, no interest shall accrue on the amount so payable for the period
from and after such Interest Payment Date, Redemption Date, Repurchase Date,
Stated Maturity or last day for conversion, as the case may be.
SECTION 1.13 Conflict With Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Until such time as this Indenture shall be qualified under the Trust Indenture
Act, this Indenture, the Company and the Trustee shall be deemed for all
purposes hereof to be subject to and governed by the Trust Indenture Act to the
same extent as would be the case if this Indenture were so qualified on the date
hereof.
ARTICLE II
SECURITY FORMS
SECTION 2.1 Form Generally.
--------------
The Securities shall be in substantially the form set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange, the Internal Revenue Code of 1986, as amended, and
regulations thereunder (the "Code"), or as may, consistent herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. All Securities shall be in fully registered form.
The Trustee's certificates of authentication shall be in substantially the
form set forth in Section 2.3.
Conversion notices shall be in substantially the form set forth in Section
2.4.
Repurchase notices shall be substantially in the form set forth in Section
2.2.
The Securities shall be printed, lithographed, typewritten or engraved or
produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any automated quotation system or securities
exchange (including on steel engraved borders if so required by any securities
exchange upon which the Securities may be listed) on which the Securities may be
quoted or listed, as the case may be, all as determined by the officers
executing such Securities, as evidenced by their execution thereof.
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<PAGE>
Upon their original issuance, Securities issued as contemplated by the
Purchase Agreement to Qualified Institutional Buyers in reliance on Rule 144A
shall be issued in the form of one or more Global Securities in definitive,
fully registered form without interest coupons and bearing the Restricted
Securities Legend. Such Global Security shall be registered in the name of DTC,
as Depositary, or its nominee and deposited with the Trustee, as custodian for
DTC, for credit by DTC to the respective accounts of beneficial owners of the
Securities represented thereby (or such other accounts as they may direct). Such
Global Security, together with its Successor Securities which are Global
Securities, are collectively herein called the "Restricted Global Security".
SECTION 2.2 Form of Security.
----------------
[FORM OF FACE]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED SECURITY:
THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY THAT IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THIS SECURITY AND ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (I) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) TO AN INSTITUTION
THAT IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, (III) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, AND IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTION OF THE UNITED
STATES.
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<PAGE>
THIS SECURITY, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND
ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO
MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS SECURITY AND ANY
SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE
INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF
RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY AND ANY SUCH
SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY AND ANY SUCH SHARES TO
HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A
NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND
ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE
INDENTURE, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.]
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<PAGE>
BEA SYSTEMS, INC.
4% CONVERTIBLE SUBORDINATED NOTE DUE JUNE 15, 2005
No.__________ $_______________
CUSIP NO._______________
BEA SYSTEMS, INC., a corporation duly organized and existing under the laws
of the State of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture referred to on the reverse hereof), for
value received, hereby promises to pay to _________________, or registered
assigns, the principal sum of ________ United States Dollars (U.S.$______ ) [IF
THIS SECURITY IS A GLOBAL SECURITY, THEN INSERT -- (which principal amount may
from time to time be increased or decreased to such other principal amounts
(which, taken together with the principal amounts of all other Outstanding
Securities, shall not exceed $250,000,000 in the aggregate at any time) by
adjustments made on the records of the Trustee hereinafter referred to in
accordance with the Indenture)] on June 15, 2005 and to pay interest thereon,
from June 12, 1998, or from the most recent Interest Payment Date (as defined
below) to which interest has been paid or duly provided for, semi-annually in
arrears on June 15 and December 15 in each year (each, an "Interest Payment
Date"), commencing December 15, 1998, at the rate of 4% per annum, until the
principal hereof is due, and at the rate of 4% per annum on any overdue
principal and premium, if any, and, to the extent permitted by law, on any
overdue interest. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest, which shall be the June 1 or December 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Except as
otherwise provided in the Indenture, any such interest not so punctually paid or
duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Company, notice whereof shall be given to Holders of Securities
not less than 10 days prior to the Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
automated quotation system or securities exchange on which the Securities may be
quoted or listed, and upon such notice as may be required by such exchange, all
as more fully provided in the Indenture. Payments of principal shall be made
upon the surrender of this Security at the option of the Holder at the
Corporate Trust Office of the Trustee, or at such other office or agency of the
Company as may be designated by it for such purpose in the Borough of Manhattan,
The City of New York, in such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of public and
private debts, or at such other offices or agencies as the Company may
designate, by United States Dollar check drawn on, or transfer to, a United
States Dollar account (such a transfer to be made only to a Holder of an
aggregate principal amount of Securities in excess of U.S.$2,000,000, and only
if such Holder shall have furnished wire instructions in writing to the Trustee
no later than
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<PAGE>
15 days prior to the relevant payment date). Payment of interest on this
Security may be made by United States Dollar check drawn on a bank in New York
City mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register, or, upon written application by the Holder to
the Security Registrar setting forth wire instructions not later than the
relevant Record Date, by transfer to a United States Dollar account (such a
transfer to be made only to a Holder of an aggregate principal amount of
Securities in excess of U.S. $2,000,000 and only if such Holder shall have
furnished wire instructions in writing to the Trustee no later than 15 days
prior to the relevant payment date).
Except as specifically provided herein and in the Indenture, the Company
shall not be required to make any payment with respect to any tax, assessment or
other governmental charge imposed by any government or any political subdivision
or taxing authority thereof or therein.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof or an Authenticating Agent by the
manual signature of one of their respective authorized signatories, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed.
BEA SYSTEMS, INC.
By:_________________________________
Name:
Title:
Attest:
By: _____________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated:
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Trustee
By: _______________________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE]
This Security is one of a duly authorized issue of securities of the
Company designated as its "4% Convertible Subordinated Notes due June 15, 2005"
(herein called the "Securities"), limited in aggregate principal amount to U.S.
$250,000,000, issued and to be issued under an Indenture, dated as of June 1,
1998 (herein called the "Indenture"), between the Company and State Street Bank
and Trust Company of California, N.A., as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee, the holders of Senior Indebtedness and
the Holders of the Securities and of the terms upon which the Securities are,
and are to be, authenticated and delivered. As provided in the Indenture and
subject to certain limitations therein set forth, Securities are exchangeable
for a like aggregate principal amount of Securities of any authorized
denominations as requested by the Holder surrendering the same upon surrender of
the Security or Securities to be exchanged, at the Corporate Trust Office of the
Trustee. The Trustee upon such surrender by the Holder will issue the new
Securities in the requested denominations.
No sinking fund is provided for the Securities. The Securities will not be
subject to redemption prior to June 20, 2001 and will be redeemable on and after
that date at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days notice to the Holders prior to the Redemption Date at
the Redemption Prices (expressed as percentages of the principal amount) set
forth below; provided, however, that the Securities will not be redeemable
during the period beginning on June 20, 2001 and ending on June 17, 2003 unless
the Closing Price Per Share of the Common Stock exceeds 140% of the Conversion
Price for at least 20 Trading Days within a period of 30 consecutive Trading
Days ending within five Trading Days immediately preceding the aforesaid notice
to Holders.
The following table sets forth the Redemption Prices (expressed as
percentages of the principal amount) if such Security is redeemed during the 12-
month period beginning June 15 (June 20, 2001 through June 14, 2002 in the case
of the first such period and June 17, 2003 through June 14, 2004 in the case of
the third such period):
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
------ -----------------
<S> <C>
2001 102.29%
2002 101.71
2003 101.14
2004 100.57
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount,
together, in each case, with accrued interest to the Redemption Date; provided,
however, that interest installments on Securities whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.
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<PAGE>
In the event of a redemption of the Securities, the Company will not be
required (a) to register the transfer or exchange of Securities for a period of
15 days immediately preceding the date notice is given identifying the serial
numbers of the Securities called for such redemption or (b) to register the
transfer or exchange of any Security, or portion thereof, called for redemption.
In any case where the due date for the payment of the principal of,
premium, if any, interest, or Liquidated Damages on any Security or the last day
on which a Holder of a Security has a right to convert his Security shall be, at
any Place of Payment or Place of Conversion as the case may be, a day on which
banking institutions at such Place of Payment or Place of Conversion are
authorized or obligated by law or executive order to close, then payment of
principal, premium, if any, interest, or Liquidated Damages, or delivery for
conversion of such Security need not be made on or by such date at such place
but may be made on or by the next succeeding day at such place which is not a
day on which banking institutions are authorized or obligated by law or
executive order to close, with the same force and effect as if made on the date
for such payment or the date fixed for redemption or repurchase, or by such last
day for conversion, and no interest shall accrue on the amount so payable for
the period after such date.
Subject to and upon compliance with the provisions of the Indenture, the
Holder of this Security is entitled, at his option, at any time on or after the
90th day following the initial issuance date of the Securities and on or before
the close of business on the date of Maturity, or in case this Security or a
portion hereof is called for redemption or the Holder hereof has exercised his
right to require the Company to repurchase this Security or such portion hereof,
then in respect of this Security until and including, but (unless the Company
defaults in making the payment due upon redemption or repurchase, as the case
may be) not after, the close of business on the Redemption Date or the
Repurchase Date, as the case may be, to convert this Security (or any portion of
the principal amount hereof that is an integral multiple of U.S.$1,000, provided
that the unconverted portion of such principal amount is U.S.$1,000 or any
integral multiple of U.S.$1,000 in excess thereof) into fully paid and
nonassessable shares of Common Stock of the Company at an initial Conversion
Rate of 37.8698 shares of Common Stock for each U.S.$1,000 principal amount of
Securities (or at the current adjusted Conversion Rate if an adjustment has been
made as provided in the Indenture) by surrender of this Security, duly endorsed
or assigned to the Company or in blank and, in case such surrender shall be made
during the period from the close of business on any Regular Record Date next
preceding any Interest Payment Date to the opening of business on such Interest
Payment Date (except if this Security or portion thereof has been called for
redemption on a Redemption Date or is repurchasable on a Repurchase Date
occurring, in either case, during such period and, as a result, the right to
convert would terminate in such period), also accompanied by payment in New York
Clearing House or other funds acceptable to the Company of an amount equal to
the interest payable on such Interest Payment Date on the principal amount of
this Security then being converted, and also the conversion notice hereon duly
executed, to the Company at the Corporate Trust Office of the Trustee, or at
such other office or agency of the Company, subject to any laws or regulations
applicable thereto and subject to the right of the Company to terminate the
appointment of any Conversion Agent (as defined below) as may be designated by
it for such purpose in the Borough of Manhattan, The City of New York, or at
such other offices or agencies as the Company may designate (each a "Conversion
Agent"), provided, further, that if this Security or
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<PAGE>
portion hereof has been called for redemption on a Redemption Date or is
repurchasable on a Repurchase Date occurring, in either case, during the period
from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such succeeding Interest
Payment Date and is surrendered for conversion during such period, then the
Holder of this Security on such Regular Record Date will be entitled to receive
the interest accruing hereon from the Interest Payment Date next preceding the
date of such conversion to such succeeding Interest Payment Date and the Holder
of this Security who converts this Security or a portion hereof during such
period shall not be required to pay such interest upon surrender of this
Security for conversion. Subject to the provisions of the preceding sentence
and, in the case of a conversion after the close of business on the Regular
Record Date next preceding any Interest Payment Date and on or before the close
of business on such Interest Payment Date, to the right of the Holder of this
Security (or any Predecessor Security of record as of such Regular Record Date)
to receive the related installment of interest to the extent and under the
circumstances provided in the Indenture, no cash payment or adjustment is to be
made on conversion for interest accrued hereon from the Interest Payment Date
next preceding the day of conversion, or for dividends on the Common Stock
issued on conversion hereof. The Company shall thereafter deliver to the Holder
the fixed number of shares of Common Stock (together with any cash adjustment,
as provided in the Indenture) into which this Security is convertible and such
delivery will be deemed to satisfy the Company's obligation to pay the principal
amount of this Security. No fractions of shares or scrip representing fractions
of shares will be issued on conversion, but instead of any fractional interest
(calculated to the nearest 1/100th of a share) the Company shall pay a cash
adjustment as provided in the Indenture. The Conversion Rate is subject to
adjustment as provided in the Indenture. In addition, the Indenture provides
that in case of certain consolidations or mergers to which the Company is a
party (other than a consolidation or merger that does not result in any
reclassification, conversion, exchange or cancellation of the Common Stock) or
the conveyance, transfer, sale or lease of all or substantially all of the
property and assets of the Company, the Indenture shall be amended, without the
consent of any Holders of Securities, so that this Security, if then
Outstanding, will be convertible thereafter, during the period this Security
shall be convertible as specified above, only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, transfer, sale or lease by a holder of the number of shares of
Common Stock of the Company into which this Security could have been converted
immediately prior to such consolidation, merger, conveyance, transfer, sale or
lease (assuming such holder of Common Stock is not a Constituent Person or an
Affiliate of a Constituent Person, failed to exercise any rights of election and
received per share the kind and amount received per share by a plurality of Non-
electing Shares and further assuming, if such consolidation, merger, conveyance,
transfer, sale or lease occurs prior to 90 days following the last original
issue date of the Securities, that the Security was convertible at the time of
such occurrence at the Conversion Rate specified above as adjusted from the
issue date of such Security to such time as provided in the Indenture). No
adjustment in the Conversion Rate will be made until such adjustment would
require an increase or decrease of at least one percent of such rate, provided
that any adjustment that would otherwise be made will be carried forward and
taken into account in the computation of any subsequent adjustment.
If this Security is a Registrable Security (as defined in this Indenture),
then the Holder of this Security [IF THIS SECURITY IS A GLOBAL SECURITY, THEN
INSERT -- (including any Person that has a
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<PAGE>
beneficial interest in this Security)] and the Common Stock of the Company
issuable upon conversion hereof is entitled to the benefits of a Registration
Rights Agreement, dated as of June 1, 1998, executed by the Company (the
"Registration Rights Agreement"). Pursuant to the Registration Rights
Agreement, the Company has agreed for the benefit of the Holders from time to
time of the Registrable Securities that it will, at its expense, (a) within 90
days after the Issue Date file a shelf registration statement (the "Shelf
Registration Statement") with the Commission with respect to resales of the
Registrable Securities, (b) use all reasonable efforts to cause such Shelf
Registration Statement to be declared effective by the Commission within 180
days after the Issue Date of the Securities, provided, however, that the Company
may, upon written notice to all the Holders, postpone having the Shelf
Registration Statement declared effective for a resasonable period not to exceed
90 days if the Company possesses material non-public information, the disclosure
of which would have a material adverse effect on the Company and its
subsidiaries taken as a whole, and (c) use all reasonable efforts to maintain
such Shelf Registration Statement effective under the Securities Act of 1933, as
amended, until the second annual anniversary of the date it is declared
effective or such earlier date as is provided in the Registration Rights
Agreement (the "Effectiveness Period"). The Company will be permitted to suspend
the use of the prospectus which is part of the Shelf Registration Statement
during certain periods of time as provided in the Registration Rights Agreement.
If (i) on or prior to 90 days following the Issue Date, a Shelf
Registration Statement has not been filed with the Commission, or (ii) on or
prior to the 180th day following the Issue Date, such Shelf Registration
Statement is not declared effective (each, a "Registration Default"), additional
interest ("Liquidated Damages") will accrue on this Restricted Security from and
including the day following such Registration Default to but excluding the day
on which such Registration Default has been cured. Liquidated Damages will be
paid semi-annually in arrears, with the first semi-annual payment due on the
first Interest Payment Date, as applicable, in respect of the Restricted
Securities following the date on which such Liquidated Damages begin to accrue,
and will accrue at a rate per annum equal to an additional one-quarter of one
percent (0.25%) of the principal amount of the Restricted Securities to and
including the 90th day following such Registration Default and at a rate per
annum equal to one-half of one percent (0.50%) thereof from and after the 91st
day following such Registration Default. Pursuant to the Registration Rights
Agreement, in the event that the Shelf Registration Statement ceases to be
effective (or the Holders of Registrable Securities are otherwise prevented or
restricted by the Company from effecting sales pursuant thereto) (an "Effective
Failure") during the Effectiveness Period for more than 60 days, whether or not
consecutive, during any 12-month period, then the interest rate borne by the
Restricted Securities shall increase by an additional one-half of one percent
(0.50%) per annum from the 61st day of the applicable 12-month period until such
time as the Effective Failure is cured.
Whenever in this Security there is a reference, in any context, to the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security, such mention shall be deemed to include mention of the payment of
Liquidated Damages payable as described in the preceding paragraph to the extent
that, in such context, Liquidated Damages are, were or would be payable in
respect of such Security and express mention of the payment of Liquidated
Damages (if applicable)
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<PAGE>
in any provisions of this Security shall not be construed as excluding
Liquidated Damages in those provisions of this Security where such express
mention is not made.
[If this Security is a Registrable Security and the Holder of this Security
[IF THIS SECURITY IS A GLOBAL SECURITY, THEN INSERT -- (including any Person
that has a beneficial interest in this Security)] elects to sell this Security
pursuant to the Shelf Registration Statement then, by its acceptance hereof,
such Holder of this Security agrees to be bound by the terms of the Registration
Rights Agreement relating to the Registrable Securities which are the subject of
such election.]
If a Change in Control occurs, the Holder of this Security, at the Holder's
option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion of
the principal amount hereof that is at least $5,000 or an integral multiple of
$1,000 in excess thereof, provided that the portion of the principal amount of
this Security to be Outstanding after such repurchase is at least equal to
U.S.$1,000) for cash at a Repurchase Price equal to 100% of the principal amount
thereof plus interest accrued to the Repurchase Date. At the option of the
Company, the Repurchase Price may be paid in cash or, subject to the conditions
provided in the Indenture, by delivery of shares of Common Stock having a fair
market value equal to the Repurchase Price. For purposes of this paragraph, the
fair market value of shares of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the Closing Prices Per Share for the
five consecutive Trading Days immediately preceding and including the third
Trading Day prior to the Repurchase Date. Whenever in this Security there is a
reference, in any context, to the principal of any Security as of any time, such
reference shall be deemed to include reference to the Repurchase Price payable
in respect of such Security to the extent that such Repurchase Price is, was or
would be so payable at such time, and express mention of the Repurchase Price in
any provision of this Security shall not be construed as excluding the
Repurchase Price so payable in those provisions of this Security when such
express mention is not made; provided, however, that, for the purposes of the
second succeeding paragraph, such reference shall be deemed to include reference
to the Repurchase Price only to the extent the Repurchase Price is payable in
cash.
[THE FOLLOWING PARAGRAPH SHALL APPEAR IN EACH GLOBAL SECURITY:
IN THE EVENT OF A DEPOSIT OR WITHDRAWAL OF AN INTEREST IN THIS SECURITY,
INCLUDING AN EXCHANGE, TRANSFER, REDEMPTION, REPURCHASE OR CONVERSION OF THIS
SECURITY IN PART ONLY, THE TRUSTEE, AS CUSTODIAN OF THE DEPOSITARY, SHALL MAKE
AN ADJUSTMENT ON ITS RECORDS TO REFLECT SUCH DEPOSIT OR WITHDRAWAL IN ACCORDANCE
WITH THE APPLICABLE PROCEDURES.]
[THE FOLLOWING PARAGRAPH SHALL APPEAR IN EACH SECURITY THAT IS NOT A GLOBAL
SECURITY:
IN THE EVENT OF REDEMPTION, REPURCHASE OR CONVERSION OF THIS SECURITY IN
PART ONLY, A NEW SECURITY OR SECURITIES FOR THE UNREDEEMED, UNREPURCHASED OR
UNCONVERTED PORTION HEREOF WILL BE ISSUED IN THE NAME OF THE HOLDER HEREOF.]
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<PAGE>
The indebtedness evidenced by this Security is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment
to the prior payment in full of all Senior Indebtedness of the Company, and this
Security is issued subject to such provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes.
If an Event of Default shall occur and be continuing, the principal of all
the Securities, together with accrued interest to the date of declaration, may
be declared due and payable in the manner and with the effect provided in the
Indenture. Upon payment (i) of the amount of principal so declared due and
payable, together with accrued interest to the date of declaration, and (ii) of
interest on any overdue principal and, to the extent permitted by applicable
law, overdue interest, all of the Company's obligations in respect of the
payment of the principal of and interest on the Securities shall terminate.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with either (a) the written consent of
the Holders of not less than a majority in principal amount of the Securities at
the time Outstanding, or (b) by the adoption of a resolution, at a meeting of
Holders of the Outstanding Securities at which a quorum is present, by the
Holders of at least 66-2/3% in aggregate principal amount of the Outstanding
Securities represented and entitled to vote at such meeting. The Indenture also
contains provisions permitting the Holders of specified percentages in principal
amount of the Securities at the time Outstanding, on behalf of the Holders of
all the Securities, to waive compliance by the Company with certain provisions
of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued in exchange therefore or in lieu hereof
whether or not notation of such consent or waiver is made upon this Security or
such other Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default, the Holders of not less
than 25% in principal amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default as Trustee and offered the Trustee reasonable indemnity and the
Trustee shall not have received from the Holders of a majority in principal
amount of the Securities Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement
of any payment of principal hereof, premiums if any, or interest (including
Liquidated Damages) hereon on or after the respective due dates expressed herein
or for the enforcement of the right to convert this Security as provided in the
Indenture.
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<PAGE>
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest (including Liquidated Damages) on this Security at the times, places
and rate, and in the coin or currency, herein prescribed or to convert this
Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable on the Security Register
upon surrender of this Security for registration of transfer at the Corporate
Trust Office of the Trustee or at such other office or agency of the Company as
may be designated by it for such purpose in the Borough of Manhattan, The City
of New York (which shall initially be an office or agency of the Trustee), or at
such other offices or agencies as the Company may designate, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder thereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees by the Registrar. No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to recover any tax or
other governmental charge payable in connection therewith.
Prior to due presentation of a this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered, as the owner thereof for
all purposes, whether or not such Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse for the payment of the principal (and premium, if any) or
interest on this Security and no recourse under or upon any obligation, covenant
or agreement of the Company in the Indenture or any indenture supplemental
thereto or in any Security, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
employee, agent, officer or director or subsidiary, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of consideration for the issue hereof, expressly waived and released.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
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<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of
this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM as tenant in common UNIF GIFT MIN ACT ____ Custodian _____
TEN ENT as tenants by the entireties (Cust) (Cust) (Minor)
JT TEN as joint tenants with right of under Uniform Gifts
survivorship and not as tenants in to Minors Act _____
common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
-29-
<PAGE>
ELECTION OF HOLDER TO REQUIRE REPURCHASE
(1) Pursuant to Article 14.1 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Company.
(2) The undersigned hereby directs the Trustee or the Company to pay it or
______________ an amount in cash or, at the Company's election, Common Stock
valued as set forth in the Indenture, equal to 100% of the principal amount to
be repurchased (as set forth below), plus interest accrued to the Repurchase
Date, as provided in the Indenture.
Dated:
_________________________________________
_________________________________________
Signature(s)
Signature(s) must be guaranteed by an Eligible
Guarantor Institution with membership in an
approved signature guarantee program pursuant
to Rule 17Ad-15 under the Securities Exchange
Act of 1934.
_________________________________________
Signature Guaranteed
Principal amount to be repurchased (at least
U.S. $5,000 or an integral multiple of $1,000
in excess thereof): ___________________
Remaining principal amount following such
repurchase (not less than U.S. $1,000):
______________
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
SECTION 2.3 Form of Certificate of Authentication.
-------------------------------------
The Trustee's certificate of authentication shall be in substantially the
following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated:____________
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<PAGE>
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
By:_________________________________
Authorized Signatory
SECTION 2.4 Form of Conversion Notice.
-------------------------
CONVERSION NOTICE
The undersigned Holder of this Security hereby irrevocably exercises the
option to convert this Security, or any portion of the principal amount hereof
(which is U.S.$1,000 or an integral multiple of U.S.$1,000 in excess thereof,
provided that the unconverted portion of such principal amount is U.S. $1,000 or
any integral multiple of U.S. $1,000 in excess thereof) below designated, into
shares of Common Stock in accordance with the terms of the Indenture referred to
in this Security, and directs that such shares, together with a check in payment
for any fractional share and any Securities representing any unconverted
principal amount hereof, be delivered to and be registered in the name of the
undersigned unless a different name has been indicated below. If shares of
Common Stock or Securities are to be registered in the name of a Person other
than the undersigned, (a) the undersigned will pay all transfer taxes payable
with respect thereto and (b) signature(s) must be guaranteed by an Eligible
Guarantor Institution with membership in an approved signature guarantee program
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. Any amount
required to be paid by the undersigned on account of interest accompanies this
Security.
Dated:______________ ____________________________________
____________________________________
Signature(s)
If shares or Securities are to be registered in the
name of a Person other than the Holder, please
print such Person's name and address:
_________________________________
(Name)
_________________________________
_________________________________
(Address)
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<PAGE>
_________________________________________
Social Security or other Identification
Number, if any
_________________________________________
[Signature Guaranteed]
If only a portion of the Securities is to be converted, please indicate:
1. Principal amount to be converted: U.S. $ ___________
2. Principal amount and denomination of Securities
representing unconverted principal amount to be issued:
Amount: U.S. ___________$Denominations: U.S. $____________
(U.S.$1,000 or any integral multiple of U.S.$1,000 in excess thereof, provided
that the unconverted portion of such principal amount is U.S. $1,000 or any
integral multiple of U.S. $1,000 in excess thereof)
SECTION 2.5 Form of Assignment.
------------------
For value received ________________ hereby sell(s), assign(s) and
transfer(s) unto ________________ (Please insert social security or other
identifying number of assignee) the within Security, and hereby irrevocably
constitutes and appoints ____________________as attorney to transfer the said
Security on the books of the Company, with full power of substitution in the
premises.
Dated:_________________
____________________________________
____________________________________
Signature(s)
Signature(s) must be guaranteed by an
Eligible Guarantor Institution with
membership in an approved signature
guarantee program pursuant to Rule
17Ad -15 under the Securities Exchange
Act of 1934.
____________________________________
Signature Guaranteed
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<PAGE>
ARTICLE III
THE SECURITIES
SECTION 3.1 Title and Terms.
---------------
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is limited to U.S. $250,000,000, except for
Securities authenticated and delivered pursuant to Section 3.4, 3.5, 3.6, 8.5,
12.2 or 14.3(5) in exchange for, or in lieu of, other Securities previously
authenticated and delivered under this Indenture.
The Securities shall be known and designated as the "4% Convertible
Subordinated Notes due June 15, 2005" of the Company. Their Stated Maturity
shall be June 15, 2005 and they shall bear interest on their principal amount
from June 12, 1998, payable semi-annually in arrears on June 15 and December 15
in each year, commencing December 15, 1998, at the rate of 4% per annum until
the principal thereof is due and at the rate of 4% per annum on any overdue
principal and, to the extent permitted by law, on any overdue interest;
provided, however, that payments shall only be made on a Business Day as
provided in Section 1.12.
The principal of, premium, if any, and interest on the Securities shall be
payable as provided in the form of Securities set forth in Section 2.2, and the
Repurchase Price, whether payable in cash or in shares of Common Stock, shall be
payable at such places as are identified in the Company Notice given pursuant to
Section 14.3 (any city in which any Paying Agent is located being herein called
a "Place of Payment").
The Registrable Securities are entitled to the benefits of a Registration
Rights Agreement as provided by Section 10.11 and in the form of Security set
forth in Section 2.2. The Securities are entitled to the payment of Liquidated
Damages as provided by Section 10.11.
The Securities shall be redeemable at the option of the Company at any time
on or after June 20, 2001, in whole or in part, subject to the conditions and as
otherwise provided in Article XI and in the form of Security set forth in
Section 2.2.
The Securities shall be convertible as provided in Article XII (any city in
which any Conversion Agent is located being herein called a "Place of
Conversion").
The Securities shall be subordinated in right of payment to Senior
Indebtedness of the Company as provided in Article XIII.
The Securities shall be subject to repurchase by the Company at the option
of the Holders as provided in Article XIV.
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<PAGE>
SECTION 3.2 Denominations.
-------------
The Securities shall be issuable only in registered form, without coupons,
in denominations of U.S.$1,000 and integral multiples of U.S.$1,000 in excess
thereof.
SECTION 3.3 Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its
President, one of its Executive Vice Presidents or one of its Vice Presidents,
and attested by its Chief Financial Officer, Secretary or one of its Assistant
Secretaries. Any such signature may be manual or facsimile.
Securities bearing the manual or facsimile signature of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities executed by the Company to the
Trustee or to its order for authentication, together with a Company Order for
the authentication and delivery of such Securities, and the Trustee in
accordance with such Company Order shall authenticate and make available for
delivery such Securities as in this Indenture provided.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
SECTION 3.4 Global Securities; Non-global Securities; Book-entry
----------------------------------------------------
Provisions.
----------
(1) Global Securities
(i) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated by the Company for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(ii) Except for exchanges of Global Securities for definitive, non-
Global Securities at the sole discretion of the Company, no Global Security may
be exchanged in whole or in part for Securities registered, and no transfer of a
Global Security in whole or in part may be registered, in the name of any Person
other than the Depositary for such Global Security or a
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<PAGE>
nominee thereof unless (A) such Depositary (i) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Security or
(ii) has ceased to be a clearing agency registered as such under the Exchange
Act or announces an intention permanently to cease business or does in fact do
so or (B) there shall have occurred and be continuing an Event of Default with
respect to such Global Security. In such event, if a successor Depositary for
such Global Security is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such ineligibility, the Company
will execute, and the Trustee, upon receipt of an Officers' Certificate
directing the authentication and delivery of Securities, will authenticate and
deliver, Securities, in any authorized denominations in an aggregate principal
amount equal to the principal amount of such Global Security in exchange for
such Global Security.
(iii) If any Global Security is to be exchanged for other
Securities or canceled in whole, it shall be surrendered by or on behalf of the
Depositary or its nominee to the Trustee, as Security Registrar, for exchange or
cancellation, as provided in this Article III. If any Global Security is to be
exchanged for other Securities or canceled in part, or if another Security is to
be exchanged in whole or in part for a beneficial interest in any Global
Security, in each case, as provided in Section 3.5, then either (A) such Global
Security shall be so surrendered for exchange or cancellation, as provided in
this Article III, or (B) the principal amount thereof shall be reduced or
increased by an amount equal to the portion thereof to be so exchanged or
canceled, or equal to the principal amount of such other Security to be so
exchanged for a beneficial interest therein, as the case may be, by means of an
appropriate adjustment made on the records of the Trustee, as Security
Registrar, whereupon the Trustee, in accordance with the Applicable Procedures,
shall instruct the Depositary or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender or adjustment
of a Global Security, the Trustee shall, subject to Section 3.5(3) and as
otherwise provided in this Article III, authenticate and deliver any Securities
issuable in exchange for such Global Security (or any portion thereof) to or
upon the order of, and registered in such names as may be directed by, the
Depositary or its authorized representative. Upon the request of the Trustee in
connection with the occurrence of any of the events specified in the preceding
paragraph, the Company shall promptly make available to the Trustee a reasonable
supply of Securities that are not in the form of Global Securities. The Trustee
shall be entitled to rely upon any order, direction or request of the Depositary
or its authorized representative which is given or made pursuant to this Article
III if such order, direction or request is given or made in accordance with the
Applicable Procedures.
(iv) Every Security authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Article III or otherwise, shall be
authenticated and delivered in the form of, and shall be, a registered Global
Security, unless such Security is registered in the name of a Person other than
the Depositary for such Global Security or a nominee thereof, in which case such
Security shall be authenticated and delivered in definitive, fully registered
form, without interest coupons.
(v) The Depositary or its nominee, as registered owner of a
Global Security, shall be the Holder of such Global Security for all purposes
under the Indenture and the Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the
-35-
<PAGE>
Applicable Procedures. Accordingly, any such owner's beneficial interest in a
Global Security will be shown only on, and the transfer of such interest shall
be effected only through, records maintained by the Depositary or its nominee or
its Agent Members and such owners of beneficial interests in a Global Security
will not be considered the owners or holders thereof.
(2) Non-Global Securities. Securities issued upon the events described in
Section 3.4(l)(ii) shall be in definitive, fully registered form, without
interest coupons, and shall bear the Restricted Securities Legend if and as
required by this Indenture.
SECTION 3.5 Registration; Registration of Transfer and Exchange;
----------------------------------------------------
Restrictions on Transfer.
------------------------
(1) The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office referred to as the
"Security Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. The Trustee is hereby appointed "Security Registrar"
for the purpose of registering Securities and transfers and exchanges of
Securities as herein provided.
Upon surrender for registration of transfer of any Security at an office or
agency of the Company designated pursuant to Section 10.2 for such purpose, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
any authorized denominations and of a like aggregate principal amount and
bearing such restrictive legends as may be required by this Indenture.
At the option of the Holder, and subject to the other provisions of this
Section 3.5, Securities may be exchanged for other Securities of any authorized
denomination and of a like aggregate principal amount, upon surrender of the
Securities to be exchanged at any such office or agency. Whenever any Securities
are so surrendered for exchange, and subject to the other provisions of this
Section 3.5, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive. Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Security Registrar) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company, the Trustee and the Security Registrar duly
executed, by the Holder thereof or his attorney duly authorized in writing.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt and entitled to the same benefits under this Indenture as the Securities
surrendered upon such registration of transfer or exchange.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Securities except as provided in Section 3.6, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
3.4, 8.5, 12.2 or 14.3 (other than where the shares of Common Stock are to be
issued or delivered in a name
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<PAGE>
other than that of the Holder of the Security) not involving any transfer and
other than any stamp and other duties, if any, which may be imposed in
connection with any such transfer or exchange by the United States or any
political subdivision thereof or therein, which shall be paid by the Company.
In the event of a redemption of the Securities, neither the Company nor the
Securities Registrar will be required (a) to register the transfer of or
exchange Securities for a period of 15 days immediately preceding the date
notice is given identifying the serial numbers of the Securities called for such
redemption or (b) to register the transfer of or exchange any Security, or
portion thereof, called for redemption.
(2) Certain Transfers and Exchanges. Notwithstanding any other provision of
-------------------------------
this Indenture or the Securities, transfers and exchanges of Securities and
beneficial interests in a Global Security of the kinds specified in this Section
3.5(2) shall be made only in accordance with this Section 3.5(2).
(i) Restricted Global Security to Restricted Non-global Security. In
------------------------------------------------------------
the event that non-Global Securities are to be issued pursuant to Section
3.4(1)(ii) in connection with any transfer of Securities, such transfer may be
effected only in accordance with the provisions of this Clause (2)(i) and
subject to the Applicable Procedures. Upon receipt by the Trustee, as Security
Registrar, of (A) a Company Order from the Company directing the Trustee, as
Security Registrar, to (x) authenticate and deliver one or more Securities of
the same aggregate principal amount as the beneficial interest in the Restricted
Global Security to be transferred, such instructions to contain the name or
names of the designated transferee or transferees, the authorized denomination
or denominations of the Securities to be so issued and appropriate delivery
instructions and (y) decrease the beneficial interest of a specified Agent
Member's account in a Restricted Global Security by a specified principal amount
not greater than the principal amount of such Restricted Global Security, and
(B) such other certifications, legal opinions or other information as the
Company or 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, then the Trustee, as
Security Registrar, shall decrease the principal amount of the Restricted Global
Security by the specified amount and authenticate and deliver Securities in
accordance with such instructions from the Company as provided in Section
3.4(1)(iii).
(ii) Restricted Non-global Security to Restricted Global Security. If
------------------------------------------------------------
the Holder of a Restricted Security (other than a Global Security) wishes at any
time to transfer all or any portion of such Restricted Security to a Person who
wishes to take delivery thereof in the form of a beneficial interest in the
Restricted Global Security, such transfer may be effected only in accordance
with the provisions of this Clause (2)(ii) and subject to the Applicable
Procedures. Upon receipt by the Trustee, as Security Registrar, of (A) such
Restricted Security as provided in Section 3.5(1) and instructions from the
Company directing that a beneficial interest in the Restricted Global Security
in a specified principal amount not greater than the principal amount of such
Security be credited to a specified Agent Member's account and (B) a Restricted
Securities Certificate, satisfactory to the Trustee and duly executed by such
Holder or his attorney duly authorized in writing, then the Trustee, as Security
Registrar, shall cancel such Restricted Security (and issue a new Restricted
-37-
<PAGE>
Security in respect of any untransferred portion thereof) as provided in Section
3.5(1) and increase the principal amount of the Restricted Global Security by
the specified principal amount as provided in Section 3.4(1)(iii).
(iii) Exchanges Between Global Security and Non-global Security.
---------------------------------------------------------
A beneficial interest in a Global Security may be exchanged for a Security that
is not a Global Security only as provided in Section 3.4 or only if such
exchange occurs in connection with a transfer effected in accordance with Clause
2(i) above, provided that, if such interest is a beneficial interest in the
Restricted Global Security, then such interest shall be exchanged for a
Restricted Security (subject in each case to Section 3.5(3)). A Security that is
not a Global Security may be exchanged for a beneficial interest in a Global
Security only if such exchange occurs in connection with a transfer effected in
accordance with Clause (2)(ii) above.
(3) Securities Act Legends. All Securities issued pursuant to this
----------------------
Indenture, and all Successor Securities, shall bear the Restricted Securities
Legend, subject to the following:
(i) subject to the following Clauses of this Section 3.5(3), a
Security or any portion thereof which is exchanged, upon transfer or otherwise,
for a Global Security or any portion thereof shall bear the Restricted
Securities Legend borne by such Global Security for which the Security was
exchanged;
(ii) subject to the following Clauses of this Section 3.5(3), a new
Security which is not a Global Security and is issued in exchange for another
Security (including a Global Security) or any portion thereof, upon transfer or
otherwise, shall bear the Restricted Securities Legend borne by the Security for
which the new Security was exchanged;
(iii) any Securities which are sold or otherwise disposed of pursuant
to an effective registration statement under the Securities Act (including the
Shelf Registration Statement), together with their Successor Securities shall
not bear a Restricted Securities Legend; the Company shall inform the Trustee in
writing of the effective date of any such registration statement registering the
Securities under the Securities Act and shall notify the Trustee at any time
when prospectuses must be delivered with respect to Securities to be sold
pursuant to such registration statement. The Trustee shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
aforementioned registration statement;
(iv) at any time after the Securities may be freely transferred
without registration under the Securities Act or without being subject to
transfer restrictions pursuant to the Securities Act, a new Security which does
not bear a Restricted Securities Legend may be issued in exchange for or in lieu
of a Security (other than a Global Security) or any portion thereof which bears
such a legend if the Trustee has received an Unrestricted Securities
Certificate, satisfactory to the Trustee and duly executed by the Holder of such
Security bearing a Restricted Securities Legend or his attorney duly authorized
in writing, and after such date and receipt of such certificate, the Trustee
shall authenticate and deliver such new Security in exchange for or in lieu of
such other Security as provided in this Article III;
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(v) a new Security which does not bear a Restricted Securities
Legend may be issued in exchange for or in lieu of a Security (other than a
Global Security) or any portion thereof which bears such a legend if, in the
Company's judgment, placing such a legend upon such new Security is not
necessary to ensure compliance with the registration requirements of the
Securities Act, and the Trustee, at the direction of the Company, shall
authenticate and deliver such a new Security as provided in this Article III;
and
(vi) notwithstanding the foregoing provisions of this Section 3.5(3),
a Successor Security of a Security that does not bear a Restricted Securities
Legend shall not bear such legend unless the Company has reasonable cause to
believe that such Successor Security is a "restricted security" within the
meaning of Rule 144, in which case the Trustee, at the direction of the Company,
shall authenticate and deliver a new Security bearing a Restricted Securities
Legend in exchange for such Successor Security as provided in this Article III.
(4) Any stock certificate representing shares of Common Stock issued upon
conversion of the Securities shall bear the Restricted Securities Legend borne
by such Securities, to the extent required by this Indenture, unless such shares
of Common Stock have 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 sold pursuant to Rule 144(k) of the
Securities Act, or unless otherwise agreed by the Company in writing with
written notice thereof to the transfer agent for the Common Stock. With respect
to the transfer of shares of Common Stock issued upon conversion of the
Securities that are restricted hereunder, any deliveries of certificates, legal
opinions or other instruments that would be required to be made to the Security
Registrar in the case of a transfer of Securities, as described above, shall
instead be made to the transfer agent for the Common Stock.
(5) Neither the Trustee, the Paying Agent nor any of their agents shall
(i) have any duty to monitor compliance with or with respect to any federal or
state or other securities or tax laws or (ii) have any duty to obtain
documentation on any transfers or exchanges other than as specifically required
hereunder.
SECTION 3.6 Mutilated, Destroyed, Lost or Stolen Securities.
-----------------------------------------------
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there be delivered to the Company and to the Trustee:
(1) evidence to their satisfaction of the destruction, loss or theft of any
Security, and
(2) such security or indemnity as may be satisfactory to the Company and
the Trustee to save each of them and any agent of either of them harmless, then,
in the absence of actual notice to the Company or the Trustee that such Security
has been acquired by a bona fide purchaser, the
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Company shall execute and the Trustee shall authenticate and deliver, in lieu of
any such destroyed, lost or stolen Security, a new Security of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion, but
subject to any conversion rights, may, instead of issuing a new Security, pay
such Security, upon satisfaction of the conditions set forth in the preceding
paragraph.
Upon the issuance of any new Security under this Section 3.6, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto (other than any
stamp and other duties, if any, which may be imposed in connection therewith by
the United States or any political subdivision thereof or therein, which shall
be paid by the Company) and any other expenses (including the fees and expenses
of the Trustee) connected therewith.
Every new Security issued pursuant to this Section 3.6 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and such new Security shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.
The provisions of this Section 3.6 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies of any Holder with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7 Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security, the date of the
proposed payment and the Special
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Record Date, and at the same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. The Special Record Date for the
payment of such Defaulted Interest shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee, in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder at such
Holder's address as it appears in the Security Register, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 3.5, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
Interest on any Security which is converted in accordance with Section 12.2
during a Record Date Period shall be payable in accordance with the provisions
of Section 12.2.
SECTION 3.8 Persons Deemed Owners.
---------------------
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee, any Paying Agent and any agent of the Company, the Trustee
or any Paying Agent may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 3.7) interest on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee, any Paying Agent nor any agent of
the Company, the Trustee or any Paying Agent shall be affected by notice to the
contrary.
SECTION 3.9 Cancellation.
------------
All Securities surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the
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Trustee. All Securities so delivered to the Trustee shall be canceled promptly
by the Trustee (or its agent). No Securities shall be authenticated in lieu of
or in exchange for any Securities canceled as provided in this Section 3.9. The
Trustee shall dispose of all canceled Securities in accordance with applicable
law and its customary practices in effect from time to time.
SECTION 3.10 Computation of Interest.
-----------------------
Interest on the Securities (including any Liquidated Damages) shall be
computed on the basis of a 360-day year of twelve 30-day months.
SECTION 3.11 Cusip Numbers.
-------------
The Company in issuing Securities may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers; if so, the Trustee shall use
such CUSIP numbers in addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such CUSIP numbers
either as printed on the Securities or as contained in any notice of a
redemption or repurchase and that reliance may be placed only on the serial or
other identification numbers printed on the Securities, and any such redemption
or repurchase shall not be affected by any defect in or omission of such CUSIP
numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction And Discharge of Indenture.
---------------------------------------
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of conversion, or registration of
transfer or exchange, or replacement of Securities herein expressly provided for
and any right to receive Liquidated Damages as provided in Section 10.11 and in
the form of Securities set forth in Section 2.2 and the Company's obligations to
the Trustee pursuant to Section 6.7), and the Trustee, at the expense of the
Company, shall execute proper instruments in form and substance satisfactory to
the Trustee acknowledging satisfaction and discharge of this Indenture, when
(1) either
(i) all Securities theretofore authenticated and delivered
(other than (A) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 3.6 and (B) Securities for
whose payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 10.3) have been delivered to the Trustee
for cancellation; or
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(ii) all such Securities not theretofore delivered to the
Trustee or its agent for cancellation (other than Securities referred to in
clauses (A) and (B) of clause (1)(i) above)
(a) have become due and payable, or
(b) will have become due and payable at their Stated
Maturity within one year, or
(c) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company, and the Company,
in the case of clause (a), (b) or (c) above, has deposited or caused to be
deposited with the Trustee as trust funds (immediately available to the Holders
in the case of clause (a)) in trust for the purpose an amount in cash sufficient
to pay and discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal, premium, if any, and
interest (including any Liquidated Damages) to the date of such deposit (in the
case of Securities which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Company to any Authenticating Agent under Section 6.12, the obligation of
the Company to pay Liquidated Damages, if money shall have been deposited with
the Trustee pursuant to clause (1)(ii) of this Section 4.1, the obligations of
the Trustee under Section 4.2 and the last paragraph of Section 10.3 and the
obligations of the Company and the Trustee under Section 3.5 and Article XII
shall survive. Funds held in trust pursuant to this Section are not subject to
the provisions of Article XIII.
SECTION 4.2 Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 and in accordance with
the provisions of Article XIII shall be held in trust for the sole benefit of
the Holders and not be subject to the subordination provisions of Article XIII,
and such monies shall be applied by the Trustee, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent, to the Persons entitled thereto, of the principal,
premium, if any, and interest for whose payment such money has been deposited
with the Trustee.
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All moneys deposited with the Trustee pursuant to Section 4.1 (and
held by it or any Paying Agent) for the payment of Securities subsequently
converted shall be returned to the Company upon Company Request.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed or assessed against all money deposited with the Trustee
pursuant to Section 4.1 (other than income taxes and franchise taxes incurred or
payable by the Trustee and such other taxes, fees or charges incurred or payable
by the Trustee that are not directly the result of the deposit of such money
with the Trustee).
ARTICLE V
REMEDIES
SECTION 5.1 Events of Default.
-----------------
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article XIII or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of the principal of or premium, if any, on
any Security at its Maturity, whether or not such payment is prohibited by the
subordination provisions of the Securities or of this Indenture; or
(2) default in the payment of any interest (including any Liquidated
Damages) upon any Security when it becomes due and payable, and continuance of
such default for a period of 30 days, whether or not such payment is prohibited
by the subordination provisions of the Securities or of this Indenture; or
(3) failure by the Company to give a Company Notice in accordance with
Section 14.3 whether or not such Company Notice is prohibited by the
subordination provisions of the Securities or the Indenture; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a default in
the performance or breach of which is specifically dealt with elsewhere in this
Section), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written notice specifying such
default or breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
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(5) any indebtedness under any bonds, debentures, notes or other
evidences of indebtedness for money borrowed (or guarantee thereof) by the
Company or any Significant Subsidiary or under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company or any Significant
Subsidiary (an "Instrument") with an aggregate principal amount in excess of
U.S. $10,000,000, whether such indebtedness now exists or shall hereafter be
created, is not paid at final maturity of any Instrument (either at its stated
maturity or upon acceleration thereof), and such indebtedness is not discharged,
or such acceleration is not rescinded or annulled, within a period of 30 days
after there shall have been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities a written notice
specifying such default and requiring the Company to cause such indebtedness to
be discharged or cause such default to be cured or waived or such acceleration
to be rescinded or annulled and stating that such notice is a "Notice of
Default" hereunder; or
(6) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company or any Significant Subsidiary a bankrupt
or insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company or any
Significant Subsidiary under any applicable Federal or State law, or appointing
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Significant Subsidiary or of any
substantial part of the property of either, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a period of
60 consecutive days; or
(7) the commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by either
to the entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar law or
to the commencement of any bankruptcy or insolvency case or proceeding against
either, or the filing by either of a petition or answer or consent seeking
reorganization or similar relief under any applicable Federal or State law, or
the consent by either to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any Significant
Subsidiary or of any substantial part of the property of either, or the making
by either of an assignment for the benefit of creditors, or the admission by
either in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Company or any Significant
Subsidiary in furtherance of any such action.
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SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default (other than an Event of Default specified in Section
5.1(6) or 5.1(7) with respect to the Company) occurs and is continuing, then in
every such case the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities may, subject to the provisions of Article
XIII, declare the principal of all the Securities to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by the Holders), and upon any such declaration such principal and all accrued
interest thereon shall become immediately due and payable. If an Event of
Default specified in Section 5.1(6) or 5.1(7) with respect to the Company
occurs, the principal of, and accrued interest on, all the Securities shall,
subject to the provisions of Article XIII, ipso facto become immediately due and
payable without any declaration or other Act of the Holders or any act on the
part of the Trustee.
At any time after such declaration of acceleration has been made and before
a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter in this Article V provided, the Holders of a majority in
principal amount of the Outstanding Securities, by written notice to the Company
and the Trustee, may, on behalf of all Holders, rescind and annul such
declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient to
pay
(i) all overdue interest on all Securities,
(ii) the principal of and premium, if any, on any Securities which
have become due otherwise than by such declaration of acceleration and any
interest thereon at the rate borne by the Securities,
(iii) to the extent permitted by applicable law, interest upon
overdue interest at a rate of 4% per annum, and
(iv) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel;
(2) all Events of Default, other than the nonpayment of the principal of
and any premium and interest on, Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section
5.13; and
(3) such rescission and annulment would not conflict with any judgment or
decree issued in appropriate judicial proceedings regarding the payment by the
Trustee to the Holders of the amounts referred to in 5.2(1).
No rescission or annulment referred to above shall affect any subsequent
default or impair any right consequent thereon.
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SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee.
-------
The Company covenants that if:
(1) default is made in the payment of any interest (including any
Liquidated Damages) on any Security when it becomes due and payable and such
default continues for a period of 30 days, or
(2) default is made in the payment of the principal of or premium, if any,
on any Security at the Maturity thereof,
the Company will, upon demand of the Trustee but subject to the provisions of
Article XIII pay to it, for the benefit of the Holders of such Securities the
whole amount then due and payable on such Securities for principal and interest
(including any Liquidated Damages) and interest on any overdue principal and
premium, if any, and, to the extent permitted by applicable law, on any overdue
interest (including any Liquidated Damages), at a rate of 4% per annum, and in
addition thereto, such further amount as shall be sufficient to cover the
reasonable costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 5.4 Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or the
creditors of either, the Trustee (irrespective of whether the principal of, and
any interest on, the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
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(1) to file and prove a claim for the whole amount of principal, premium,
if any, and interest owing and unpaid in respect of the Securities and take such
other actions, including participating as a member, voting or otherwise, of any
official committee of creditors appointed in such mater, and to file such other
papers or documents, in each of the foregoing cases, as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders of Securities allowed in
such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claim and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder of
Securities to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders of
Securities to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel and any other amounts due the Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder of a Security in any such proceeding;
provided, however, that the Trustee may, on behalf of such Holders, vote for the
election of a trustee in bankruptcy or similar official.
SECTION 5.5 Trustee May Enforce Claims Without Possession of Securities.
-----------------------------------------------------------
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which judgment has been recovered.
SECTION 5.6 Application of Money Collected.
------------------------------
Subject to Article XIII, any money collected by the Trustee pursuant to
this Article V shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal, premium, if any, or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 6.7;
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SECOND: To the payment of the amounts then due and unpaid for principal
of, premium, if any, or interest (including Liquidated Damages, if any) on, the
Securities in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal, premium, if any, and
interest (including Liquidated Damages, if any), respectively;
THIRD: To such other Person or Persons, if any, to the extent entitled
thereto; and
FOURTH: Any remaining amounts shall be repaid to the Company.
SECTION 5.7 Limitation on Suits.
-------------------
No Holder of any Security shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the Outstanding
Securities shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(3) such Holder or Holders have offered to the Trustee, and if requested,
shall have provided, reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity (or if requested, receipt of indemnity) has failed to
institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60 day period by the Holders of a majority in principal
amount of the Outstanding Securities, it being understood and intended that no
one or more of such Holders shall have any right in any manner whatever by
virtue of, or by availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other of such Holders, or to obtain or seek to
obtain priority or preference over any other of such Holders or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal and ratable benefit of all such Holders.
SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium
------------------------------------------------------------
and Interest and to Convert.
---------------------------
Notwithstanding any other provision in this Indenture, but subject to
the provisions of Article XIII, the Holder of any Security shall have the right,
which is absolute and unconditional, to receive payment of the principal of,
premium, if any, and (subject to Section 3.7) interest (including
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Liquidated Damages, if any) on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption or repurchase, on the
Redemption Date or Repurchase Date, as the case may be), and to convert such
Security in accordance with Article XII, and to institute suit for the
enforcement of any such payment and right to convert, and such rights shall not
be impaired without the consent of such Holder.
SECTION 5.9 Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder of a Security has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders of
Securities shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
such Holders shall continue as though no such proceeding had been instituted.
SECTION 5.10 Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
3.6, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders of Securities is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.11 Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or any
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the Holders of Securities may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or (subject to the
limitations contained in this Indenture) by the Holders of Securities as the
case may be.
SECTION 5.12 Control by Holders of Securities.
--------------------------------
Subject to Section 6.3, the Holders of a majority in principal amount of
the Outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or with
this Indenture, and
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(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders of Securities not
consenting.
SECTION 5.13 Waiver of Past Defaults.
-----------------------
The Holders, either (i) through the written consent of not less than a
majority in principal amount of the Outstanding Securities or (ii) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of at least 66-2/3% in principal
amount of the Outstanding Securities represented at such meeting, may on behalf
of the Holders of all the Securities waive any past default hereunder and its
consequences, except a default (A) in the payment of the principal of, premium,
if any, or interest (including Liquidated Damages) on any Security, or (B) in
respect of a covenant or provision hereof which under Article VIII cannot be
modified or amended without the consent of the Holder of each Outstanding
Security affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 5.14 Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.14 shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities, or to any suit instituted by any Holder of
any Security for the enforcement of the payment of the principal of, premium, if
any, or interest on any Security on or after the respective Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption or
repurchase, on or after the Redemption Date or Repurchase Date, as the case may
be) or for the enforcement of the right to convert any Security in accordance
with Article XII.
SECTION 5.15 Waiver of Stay, Usury or Extension Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, usury or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
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lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede by reason of such law the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
SECTION 6.1 Certain Duties and Responsibilities.
-----------------------------------
(1) Except during the continuance of an Event of Default,
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture, but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture, but not to verify the contents thereof.
(2) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(3) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(i) this paragraph (3) shall not be construed to limit the effect of
paragraph (1) of this Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Holders of a majority in principal amount of the Outstanding Securities
relating to the time, method and place of conducting any
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proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture; and
(iv) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(4) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 6.2 Notice of Defaults.
------------------
Within 90 days after the occurrence of any default hereunder as to which
the Trustee has received written notice, the Trustee shall give to all Holders
of Securities, in the manner provided in Section 1.6, notice of such default,
unless such default shall have been cured or waived; provided, however, that,
except in the case of a default in the payment of the principal of, premium, if
any, or interest on any Security the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee or
a trust committee of directors or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interest of the
Holders; and provided, further, that in the case of any default of the character
specified in Section 5.1(4), no such notice to Holders of Securities shall be
given until at least 60 days after the occurrence thereof or, if applicable, the
cure period specified therein. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default.
SECTION 6.3 Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 6.1:
(1) the Trustee may rely, and shall be protected in acting or refraining
from acting, upon any resolution, Officers' Certificate, other certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, coupon, other evidence of indebtedness or other
paper or document (collectively, the "Documents") believed by it to be genuine
and to have been signed or presented by the proper party or parties, and the
Trustee need not investigate any fact or matter stated in such Documents;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors shall be sufficiently evidenced by a Board Resolution;
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(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be the one specifically prescribed) may, in the absence of bad faith on its
part, request and rely upon an Officers' Certificate or Opinion of Counsel;
(4) the Trustee may consult with counsel of its selection and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders of Securities pursuant to this Indenture, unless such Holders shall
have offered, and, if requested by the Trustee, delivered, to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, coupon, other evidence of indebtedness or other paper or document, but the
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney; and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 6.4 Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained herein and in the Securities (except the Trustee's
certificates of authentication) shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture, of
the Securities or of the Common Stock issuable upon the conversion of the
Securities. The Trustee shall not be accountable for the use or application by
the Company of Securities or the proceeds thereof.
SECTION 6.5 May Hold Securities, Act as Trustee under Other Indentures.
----------------------------------------------------------
The Trustee, any Authenticating Agent, any Paying Agent, any Conversion
Agent or any other agent of the Company or the Trustee, in its individual or
any other capacity, may become the owner or pledgee of Securities and may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Conversion Agent or such other
agent.
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The Trustee may become and act as trustee under other indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding in the same manner as if it were not
Trustee hereunder.
SECTION 6.6 Money Held in Trust.
-------------------
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company.
SECTION 6.7 Compensation and Reimbursement.
------------------------------
The Company agrees
(1) to pay to the Trustee from time to time such reasonable compensation
as the Company and the Trustee shall from time to time agree in writing for its
acceptance of this Indenture and for all services rendered by it hereunder
(which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee (including costs and expenses of enforcing this
Indenture and defending itself against any claim (whether asserted by the
Company, any Holder of Securities or any other Person) or liability in
connection with the exercise of any of its powers or duties hereunder) in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee (and its directors, officers, employees and
agents) for, and to hold it harmless against, any 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
reasonable costs, expenses and reasonable attorneys' fees of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 5.1(6) or Section 5.1(7), the expenses
(including the reasonable charges of its counsel) and the compensation for the
services are intended to constitute expenses of the administration under any
applicable Federal or state bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee.
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SECTION 6.8 Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such, having (or
being part of a holding company group with) a combined capital and surplus of at
least U.S. $50,000,000, subject to supervision or examination by federal or
state authority, and in good standing. The Trustee or an Affiliate of the
Trustee shall maintain an established place of business in the Borough of
Manhattan, The City of New York. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article and a
successor shall be appointed pursuant to Section 6.9.
SECTION 6.9 Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(1) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10.
(2) The Trustee may resign at any time by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 6.10 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(3) The Trustee may be removed at any time by an Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.10 shall not have been delivered to the Trustee within 30
days after the giving of such notice of removal, the removed Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(4) If at any time:
(i) the Trustee shall cease to be eligible under Section 6.8 and
shall fail to resign after written request therefor by the Company or by any
Holder of a Security who has been a bona fide Holder of a Security for at least
six months, or
(ii) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
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then, in any such case (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder of a Security who has been
a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
(5) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee and shall
comply with the applicable requirements of this Section and Section 6.10. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 6.10, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders of Securities
and accepted appointment in the manner required by this Section and Section
6.10, any Holder of a Security who has been a bona fide Holder of a Security for
at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(6) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to all Holders of
Securities in the manner provided in Section 1.6. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 6.10 Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article.
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SECTION 6.11 Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee (including the trust created by this Indenture), shall
be the successor of the Trustee hereunder, provided such corporation shall be
otherwise eligible under this Article, without the execution or filing of any
paper or any further act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 6.12 Authenticating Agents.
---------------------
The Trustee may, with the consent of the Company, appoint an Authenticating
Agent or Agents acceptable to the Company with respect to the Securities which
shall be authorized to act on behalf of the Trustee to authenticate Securities
issued upon exchange or substitution pursuant to this Indenture.
Securities authenticated by an Authenticating Agent shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder, and every reference in
this Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee's certificate of authentication shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be subject to acceptance
by the Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any State thereof or
the District of Columbia, authorized under such laws to act as Authenticating
Agent and subject to supervision or examination by government or other fiscal
authority. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.12, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section 6.12.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section 6.12, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
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Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.12, the Trustee may appoint a successor
Authenticating Agent which shall be subject to acceptance by the Company. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 6.12.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 6.12.
If an Authenticating Agent is appointed with respect to the Securities
pursuant to this Section 6.12, the Securities may have endorsed thereon, in
addition to or in lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following form:
This is one of the Securities referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.
as Trustee
By:
___________________________________
As Authenticating Agent
By:
___________________________________
Authorized Signatory
SECTION 6.13 Disqualification; Conflicting Interests.
---------------------------------------
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 6.14 Preferential Collection of Claims Against Company.
-------------------------------------------------
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
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ARTICLE VII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1 Company May Consolidate, Etc., Only on Certain Terms.
----------------------------------------------------
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease all its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer, sell or lease
such Person's properties and assets substantially as an entirety to the Company
unless:
(1) the Person formed by such consolidation or into or with which the
Company is merged or the Person to which the properties and assets of the
Company are so conveyed, transferred, sold or leased shall be a corporation,
limited liability company, partnership or trust organized and validly existing
under the laws of the United States of America, any State thereof or the
District of Columbia and, if other than the Company, shall expressly assume, by
an indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of,
premium, if any, and interest (including Liquidated Damages, if any) on all of
the Securities as applicable, and the performance or observance of every
covenant of this Indenture on the part of the Company to be performed or
observed and shall have provided for conversion rights in accordance with
Article XII;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event that after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating to such transaction
have been complied with, together with any documents required under Section 8.3.
SECTION 7.2 Successor Substituted.
---------------------
Upon any consolidation of the Company with, or merger of the Company into
any other Person or any conveyance, transfer or lease of all or substantially
all the properties and assets of the Company in accordance with Section 7.1, the
successor Person formed by such consolidation or into or with which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities.
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ARTICLE VIII
SUPPLEMENTAL INDENTURES
SECTION 8.1 Supplemental Indentures Without Consent of Holders of Securities.
----------------------------------------------------------------
Without the consent of any Holders of Securities the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto for any of the
following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants and obligations of the Company
herein and in the Securities as permitted by Article VII of this Indenture; or
(2) to add to the covenants of the Company for the benefit of the Holders
of Securities or to surrender any right or power herein conferred upon the
Company; or
(3) to secure the Securities; or
(4) to make provision with respect to the conversion rights of Holders of
Securities pursuant to Section 12.11 or to make provision with respect to the
repurchase rights of Holders of Securities pursuant to Section 14.5; or
(5) to make any changes or modifications to this Indenture necessary in
connection with the registration of any Registrable Securities under the
Securities Act as contemplated by Section 10.11, provided such action pursuant
to this clause (5) shall not adversely affect the interests of the Holders of
Securities; or
(6) to comply with the requirements of the Trust Indenture Act or the
rules and regulations of the Commission thereunder in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act, as
contemplated by this Indenture or otherwise; or
(7) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee; or
(8) subject to Section 13.12, to make any change in Article XIII that
would limit or terminate the benefits available to any holder of Senior
Indebtedness under such Article; or
(9) to cure any ambiguity, to correct or supplement any provision herein
which may be inconsistent with any other provision herein or which is otherwise
defective, or to make any other provisions with respect to matters or questions
arising under this Indenture as the Company and the Trustee may deem necessary
or desirable, provided such action pursuant to this clause (9) shall not
adversely affect the interests of the Holders of Securities in any material
respect.
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Upon Company Request, accompanied by a Board Resolution authorizing the
execution of any such supplemental indenture, and subject to and upon receipt by
the Trustee of the documents described in Section 8.3 hereof, the Trustee shall
join with the Company in the execution of any supplemental indenture authorized
or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained.
SECTION 8.2 Supplemental Indentures with Consent of Holders of Securities.
-------------------------------------------------------------
With either (i) the written consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, by the Act of said
Holders delivered to the Company and the Trustee, or (ii) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of at least 66-2/3% in principal amount of the
Outstanding Securities represented at such meeting, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent or affirmative vote of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any installment of
interest on, any Security, or reduce the principal amount of, or the premium, if
any, or the rate of interest payable thereon, or reduce the amount payable upon
a redemption or mandatory repurchase, or change the place or currency of payment
of the principal of, premium, if any, or interest on any Security (including any
payment of Liquidated Damages or Redemption Price or Repurchase Price in respect
of such Security) or impair the right to institute suit for the enforcement of
any payment in respect of any Security on or after the Stated Maturity thereof
(or, in the case of redemption or any repurchase, on or after the Redemption
Date or Repurchase Date, as the case may be) or, except as permitted by Section
12.11, adversely affect the right of Holders to convert any Security as provided
in Article XII, or modify the provisions of this Indenture with respect to the
subordination of the Securities in a manner adverse to the Holders; or
(2) reduce the requirements of Section 9.4 for quorum or voting, or reduce
the percentage in principal amount of the Outstanding Securities the consent of
whose Holders is required for any such supplemental indenture or the consent of
whose Holders is required for any waiver (of compliance with certain provisions
of this Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture; or
(3) modify the obligation of the Company to maintain an office or agency
in the Borough of Manhattan, The City of New York, pursuant to Section 10.2; or
(4) modify any of the provisions of this Section or Section 5.13 or 10.12,
except to increase any percentage contained herein or therein or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Security affected thereby; or
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(5) modify the provisions of Article XIV in a manner adverse to the
Holders; or
(6) modify any of the provisions of Section 10.9.
It shall not be necessary for any Act of Holders of Securities under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 8.3 Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Sections 6.1 and 6.3) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture, and that such supplemental
indenture has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 8.4 Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
appertaining thereto shall be bound thereby.
SECTION 8.5 Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Company and the
Trustee, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
SECTION 8.6 Notice of Supplemental Indentures.
---------------------------------
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.2, the Company
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 1.6. Any failure of the Company to give such notice, or any
defect therein, shall not in any way impair or affect the validity of any such
supplemental indenture.
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ARTICLE IX
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.1 Purposes for Which Meetings May Be Called.
-----------------------------------------
A meeting of Holders of Securities may be called at any time and from time
to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities.
SECTION 9.2 Call, Notice and Place of Meetings.
----------------------------------
(1) The Trustee may at any time call a meeting of Holders of Securities
for any purpose specified in Section 9.1, to be held at such time and at such
place in the Borough of Manhattan, The City of New York, as the Trustee shall
determine. Notice of every meeting of Holders of Securities, setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given, in the manner provided in Section 1.6,
not less than 21 nor more than 180 days prior to the date fixed for the meeting.
(2) In case at any time the Company, pursuant to a Board Resolution, or
the Holders of at least 10% in principal amount of the Outstanding Securities
shall have requested the Trustee to call a meeting of the Holders of Securities
for any purpose specified in Section 9.1, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 21 days after
receipt of such request or shall not thereafter proceed to cause the meeting to
be held as provided herein, then the Company or the Holders of Securities in the
amount specified, as the case may be, may determine the time and the place in
the Borough of Manhattan, The City of New York, for such meeting and may call
such meeting for such purposes by giving notice thereof as provided in paragraph
(1) of this Section.
SECTION 9.3 Persons Entitled to Vote at Meetings.
------------------------------------
To be entitled to vote at any meeting of Holders of Securities, a Person
shall be (i) a Holder of one or more Outstanding Securities, or (ii) a Person
appointed by an instrument in writing as proxy for a Holder or Holders of one or
more Outstanding Securities by such Holder or Holders. The only Persons who
shall be entitled to be present or to speak at any meeting of Holders shall be
the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 9.4 Quorum; Action.
--------------
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities shall constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Securities, be dissolved.
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In any other case, the meeting may be adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the adjournment of
such meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting (subject to repeated applications of this sentence). Notice of
the reconvening of any adjourned meeting shall be given as provided in Section
9.2(1), except that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be reconvened. Notice of
the reconvening of an adjourned meeting shall state expressly the percentage of
the principal amount of the Outstanding Securities which shall constitute a
quorum.
Subject to the foregoing, at the reconvening of any meeting adjourned for a
lack of a quorum, the Persons entitled to vote 25% in principal amount of the
Outstanding Securities at the time shall constitute a quorum for the taking of
any action set forth in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at which a quorum
is present as aforesaid, any resolution and all matters (except as limited by
the proviso to Section 8.2 and except to the extent Section 10.12 requires a
different vote) shall be effectively passed and decided if passed or decided by
the lesser of (i) the Holders of not less than a majority in principal amount of
Outstanding Securities and (ii) the Persons entitled to vote not less than 66-
2/3% in principal amount of Outstanding Securities represented and entitled to
vote at such meeting.
Any resolution passed or decisions taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities whether or not present or represented at the meeting. The
Trustee shall, in the name and at the expense of the Company, notify all the
Holders of Securities of any such resolutions or decisions pursuant to Section
1.6.
SECTION 9.5 Determination of Voting Rights; Conduct and Adjournment of
----------------------------------------------------------
Meetings.
--------
(1) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities in regard to proof of the holding of Securities and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be proved in
the manner specified in Section 1.4 and the appointment of any proxy shall be
proved in the manner specified in Section 1.4 or by having the signature of the
Person executing the proxy guaranteed by any bank, broker or other eligible
institution participating in a recognized medallion signature guarantee program.
(2) The Trustee shall, by an instrument in writing, appoint a temporary
chairman (which may be the Trustee) of the meeting, unless the meeting shall
have been called by the Company or by Holders of Securities as provided in
Section 9.2(1), in which case the Company or the Holders of Securities calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote
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of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities represented at the meeting.
(3) At any meeting, each Holder of a Security or proxy shall be entitled
to one vote for each U.S. $1,000 principal amount of Securities held or
represented by him; provided, however, that no vote shall be cast or counted at
any meeting in respect of any Security challenged as not Outstanding and ruled
by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Security or proxy.
(4) Any meeting of Holders of Securities duly called pursuant to Section
9.2 at which a quorum is present may be adjourned from time to time by Persons
entitled to vote a majority in principal amount of the Outstanding Securities
represented at the meeting, and the meeting may be held as so adjourned without
further notice.
SECTION 9.6 Counting Votes and Recording Action of Meetings.
-----------------------------------------------
The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amounts at Stated Maturity and serial numbers of the Outstanding
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in duplicate, of the proceedings
of each meeting of Holders of Securities shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 9.2 and, if applicable, Section 9.4. Each copy shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
ARTICLE X
COVENANTS
SECTION 10.1 Payment of Principal, Premium and Interest.
------------------------------------------
The Company covenants and agrees that it will duly and punctually pay the
principal of and premium, if any, and interest (including Liquidated Damages, if
any) on the Securities in accordance with the terms of the Securities and this
Indenture. The Company will deposit or cause to be deposited with the Trustee,
no later than the opening of business on the date of the Stated Maturity of
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any Security or no later than the opening of business on the due date for any
installment of interest, all payments so due, which payments shall be in
immediately available funds on the date of such Stated Maturity or due date, as
the case may be.
SECTION 10.2 Maintenance of Offices or Agencies.
----------------------------------
The Company will maintain in the Borough of Manhattan, The City of New
York, an office or agency where the Securities may be surrendered for
registration of transfer or exchange or for presentation for payment or for
conversion, redemption or repurchase and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency not designated or appointed by
the Trustee. 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 or the office or agency of the Trustee in the Borough of
Manhattan, The City of New York.
The Company may at any time and from time to time vary or terminate the
appointment of any such agent or appoint any additional agents for any or all of
such purposes; provided, however, that until all of the Securities have been
delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of, premium, if any, and interest on the Securities have been made
available for payment and either paid or returned to the Company pursuant to the
provisions of Section 10.3, the Company will maintain in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment and conversion, which shall initially be
State Street Bank and Trust Company, N.A., an Affiliate of the Trustee, where
Securities may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company will give prompt written notice to the
Trustee, and notice to the Holders in accordance with Section 1.6, of the
appointment or termination of any such agents and of the location and any change
in the location of any such office or agency.
The Company hereby initially designates the Trustee as Paying Agent,
Security Registrar and Conversion Agent, and each of the Corporate Trust Office
of the Trustee and the office or agency of the Trustee in the Borough of
Manhattan, The City of New York, located at 61 Broadway, 15th Floor, New York,
New York 10006, attention: Corporate Trust Administration (BEA Systems, Inc. 4%
Convertible Subordinated Notes due June 15, 2005) one such office or agency of
the Company for each of the aforesaid purposes.
SECTION 10.3 Money for Security Payments to Be Held in Trust.
-----------------------------------------------
If the Company shall act as its own Paying Agent, it will, on or before
each due date of the principal of, premium, if any, or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal, premium, if any, or
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interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and the Company will promptly notify
the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, no
later than the opening of business on each due date of the principal of,
premium, if any, or interest on any Securities, deposit with the Trustee a sum
in funds immediately payable on the payment date sufficient to pay the
principal, premium, if any, or interest so becoming due, such sum to be held for
the benefit of the Persons entitled to such principal, premium, if any, or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of any failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(1) hold all sums held by it for the payment of the principal of, premium,
if any, or interest on Securities for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal, premium,
if any, or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held by
such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Security and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease.
SECTION 10.4 Existence.
---------
Subject to Article VII, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
(charter and statutory) and franchises;
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provided, however, that the Company shall not be required to preserve any such
right or franchise 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 10.5 Maintenance of Properties.
-------------------------
The Company will cause all properties used or useful in the conduct of its
business or the business of any Significant Subsidiary to be maintained and kept
in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Significant Subsidiary and not
disadvantageous in any material respect to the Holders.
SECTION 10.6 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, assessment, charge or
claim (A) if the failure to do so will not, in the aggregate, have a material
adverse impact on the Company, or (B) if the amount, applicability or validity
is being contested in good faith by appropriate proceedings.
SECTION 10.7 Registration and Listing.
------------------------
The Company (i) will effect all registrations with, and obtain all
approvals by, all governmental authorities that may be necessary under any
United States Federal or state law (including the Securities Act, the Exchange
Act and state securities and Blue Sky laws) before the shares of Common Stock
issuable upon conversion of Securities are issued and delivered, and qualified
or listed as contemplated by clause (ii) (it being understood that the Company
shall not be required to register the Securities under the Securities Act,
except pursuant to the Registration Rights Agreement referred to in Section
10.11); and (ii) will qualify the shares of Common Stock required to be issued
and delivered upon conversion of Securities, prior to such issuance or delivery,
for quotation on the Nasdaq National Market or, if the Common Stock is not then
quoted on the Nasdaq
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National Market, list the Common Stock on each national securities exchange or
quotation system on which outstanding Common Stock is listed or quoted at the
time of such delivery.
Nothing in this Section will limit the application of Section 10.11.
SECTION 10.8 Statement by Officers as to Default.
-----------------------------------
The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
The Company will deliver to the Trustee, forthwith upon becoming aware of
any default or any Event of Default under the Indenture, 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. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default.
Any notice required to be given under this Section 10.8 shall be delivered
to the Trustee at its Corporate Trust Office.
SECTION 10.9 Delivery of Certain Information.
-------------------------------
At any time when the Company is not subject to Section 13 or 15(d) of the
Exchange Act, upon the request of a Holder of a Restricted Security or the
holder of shares of Common Stock issued upon conversion thereof, the Company
will promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Holder of Restricted Securities or such holder of shares of
Common Stock issued upon conversion of Restricted Securities, or to a
prospective purchaser of any such security designated by any such Holder or
holder, as the case may be, to the extent required to permit compliance by such
Holder or holder with Rule 144A under the Securities Act (or any successor
provision thereto) in connection with the resale of any such security; provided,
however, that the Company shall not be required to furnish such information in
connection with any request made on or after the date which is two years from
the later of (i) the date such a security (or any such predecessor security) was
last acquired from the Company or (ii) the date such a security (or any such
predecessor security) was last acquired from an "affiliate" of the Company
within the meaning of Rule 144 under the Securities Act (or any successor
provision thereto). "Rule 144A Information" shall be such information as is
specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor
provision thereto).
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SECTION 10.10 Resale of Certain Securities.
----------------------------
During the period beginning on the last date of original issuance of the
Securities and ending on the date that is two years from such date (or such
shortened period under Rule 144(k) under the Securities Act or any successor
rule), the Company will not, and will not permit any of its subsidiaries or
other "affiliates" (as defined under Rule 144 under the Securities Act or any
successor provision thereto) to, resell (i) any Securities which constitute
"restricted securities" under Rule 144 or (ii) any securities into which the
Securities have been converted under this Indenture which constitute "restricted
securities" under Rule 144, that in either case have been reacquired by any of
them. The Trustee shall have no responsibility in respect of the Company's
performance of its agreement in the preceding sentence.
SECTION 10.11 Registration Rights.
-------------------
The Company agrees that the Holders from time to time of Registrable
Securities (as defined below) are entitled to the benefits of a Registration
Rights Agreement, dated as of June 1, 1998 (the "Registration Rights
Agreement"), executed by the Company. Pursuant to the Registration Rights
Agreement, the Company has agreed for the benefit of the holders from time to
time of the Registrable Securities that it will, at its expense, (i) within 90
days after the Issue Date (as defined below) of the Securities, file a shelf
registration statement (the "Shelf Registration Statement") with the Commission
with respect to resales of the Registrable Securities, (ii) use all reasonable
efforts to cause such Shelf Registration Statement to be declared effective by
the Commission within 180 days after the Issue Date of the Securities, provided,
however that the Company may, upon written notice to all the Holders, postpone
having the Shelf Registration Statement declared effective if the Company
possesses material non-public information, the disclosure of which would have a
material adverse effect on the Company and its subsidiaries taken as a whole and
(iii) use all reasonable efforts to maintain such Shelf Registration Statement
effective under the Securities Act until the second annual anniversary of the
date it is declared effective or such earlier date as is provided in the
Registration Rights Agreement (the "Effectiveness Period"). The Company will be
permitted to suspend the use of the prospectus which is a part of the Shelf
Registration Statement during certain periods of time as provided in the
Registration Rights Agreement.
If (i) on or prior to 90 days following the Issue Date of the Securities, a
Shelf Registration Statement has not been filed with the Commission, or (ii) on
or prior to the 180th day following the Issue Date of the Securities, such Shelf
Registration Statement is not declared effective (each, a "Registration
Default"), additional interest ("Liquidated Damages") will accrue on the
Restricted Securities from and including the day following such Registration
Default to but excluding the day on which such Registration Default has been
cured. Liquidated Damages will be paid semi-annually in arrears, with the first
semi-annual payment due on the first Interest Payment Date, as applicable, in
respect of the Restricted Securities following the date on which such Liquidated
Damages begin to accrue, and will accrue at a rate per annum equal to an
additional one-quarter of one percent (0.25%) of the principal amount of the
Restricted Securities to and including the 90th day following such Registration
Default and at a rate per annum equal to one-half of one percent (0.50%) thereof
from and after the 91st day following such Registration Default. Pursuant to the
Registration Rights
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Agreement, in the event that the Shelf Registration Statement ceases to be
effective (or the Holders of Registrable Securities are otherwise prevented or
restricted by the Company from effecting sales pursuant thereto) (an "Effective
Failure") during the Effectiveness Period for more than 60 days, whether or not
consecutive, during any 12-month period, then the interest rate borne by the
Restricted Securities shall increase by an additional one-half of one percent
(0.50%) per annum on the 61st day of the applicable 12-month period until the
Effective Failure is cured.
Whenever in this Indenture there is mentioned, in any context, the payment
of the principal of, premium, if any, or interest on, or in respect of, any
Security, such mention shall be deemed to include mention of the payment of
Liquidated Damages provided for in this Section to the extent that, in such
context, Liquidated Damages are, were or would be payable in respect thereof
pursuant to the provisions of this Section and express mention of the payment of
Liquidated Damages (if applicable) in any provisions hereof shall not be
construed as excluding Liquidated Damages in those provisions hereof where such
express mention is not made.
For the purposes of the Registration Rights Agreement, "Registrable
Securities" means all or any portion of the Restricted Securities issued from
time to time under this Indenture and the shares of Common Stock issuable upon
conversion or repurchase of such Restricted Securities, except any such
Restricted Security or share of Common Stock issuable upon conversion or
repurchase thereof which (i) has been effectively registered under the
Securities Act and sold in a manner contemplated by the Shelf Registration
Statement, (ii) has been transferred in compliance with Rule 144 under the
Securities Act (or any successor provision thereto) or is transferable pursuant
to paragraph (k) of such Rule 144 (or any successor provision thereto) or (iii)
otherwise has been transferred and a new Security or share of Common Stock not
subject to transfer restrictions under the Securities Act has been delivered by
or on behalf of the Company in accordance with Section 3.5 of this Indenture.
If a Security, or the shares of Common Stock issuable upon conversion of a
Security, is a Registrable Security, and the Holder thereof elects to sell such
Registrable Security pursuant to the Shelf Registration Statement then, by its
acceptance thereof, the Holder of such Registrable Security will have agreed to
be bound by the terms of the Registration Rights Agreement relating to the
Registrable Securities which are the subject of such election.
For the purposes of the Registration Rights Agreement, the term "Holder"
includes any Person that has a beneficial interest in any Restricted Global
Security or any beneficial interest in a global security representing shares of
Common Stock issuable upon conversion of a Security.
SECTION 10.12 Waiver of Certain Covenants.
---------------------------
The Company may omit in any particular instance to comply with any covenant
or condition set forth in Sections 10.4 (other than with resepct to the
existence of the Company (subject to Article VII)), 10.5 and 10. 6, inclusive
(other than a covenant or condition which under Article VIII cannot be modified
or amended without the consent of the Holder of each Outstanding Security
affected), if before the time for such compliance the Holders shall, through the
written consent of, or the adoption of a resolution at a meeting of Holders of
the Outstanding Securities at which a quorum is present by,
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not less than a majority in principal amount of the Outstanding Securities,
either waive such compliance in such instance or generally waive compliance with
such covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee or any Paying or Conversion Agent in respect of any such covenant or
condition shall remain in full force and effect.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1 Right of Redemption.
-------------------
The Securities may be redeemed in accordance with the provisions of the
form of Securities set forth in Section 2.2.
SECTION 11.2 Applicability of Article.
------------------------
Redemption of Securities at the election of the Company or otherwise, as
permitted or required by any provision of the Securities or this Indenture,
shall be made in accordance with such provision and this Article XI.
SECTION 11.3 Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution. In case of any redemption at the election of the Company of
any of the Securities, the Company shall, at least 45 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date.
SECTION 11.4 Selection by Trustee of Securities to Be Redeemed.
-------------------------------------------------
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected by the Trustee within five Business
Days after it receives the notice described in 11.3, from the Outstanding
Securities not previously called for redemption, by lot or by such other method
as the Trustee may deem fair and appropriate.
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. The Trustee shall
promptly notify the Company and each Security Registrar in writing of the
securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
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For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 11.5 Notice of Redemption.
--------------------
Notice of redemption shall be given in the manner provided in Section 1.6
to the Holders of Securities to be redeemed not less than 30 nor more than 60
days prior to the Redemption Date, and such notice shall be irrevocable.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, and accrued interest (including Liquidated
Damages, if any), if any, to the Redemption Date,
(3) if less than all Outstanding Securities are to be redeemed, the
aggregate principal amount of Securities to be redeemed and the aggregate
principal amount of Securities which will be outstanding after such partial
redemption,
(4) that on the Redemption Date the Redemption Price, and accrued interest
(including Liquidated Damages, if any), if any, to the Redemption Date, will
become due and payable upon each such Security to be redeemed, and that interest
thereon shall cease to accrue on and after said date,
(5) the Conversion Rate, the date on which the right to convert the
Securities to be redeemed will terminate and the places where such Securities
may be surrendered for conversion, and
(6) the place or places where such Securities are to be surrendered for
payment of the Redemption Price and accrued interest (including Liquidated
Damages, if any), if any, to the Redemption Date.
In case of a partial redemption, the notice shall specify the serial and
CUSIP numbers (if any) and the portions thereof called for redemption and that
transfers and exchanges may occur on or prior to the Redemption Date.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's written request, by
the Trustee in the name of and at the expense of the Company. Notice of
redemption of Securities to be redeemed at the election of the Company received
by the Trustee shall be given by the Trustee to each Paying Agent in the name of
and at the expense of the Company.
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SECTION 11.6 Deposit of Redemption Price.
---------------------------
On or prior to the Redemption Date, the Company shall deposit with the
Trustee (or, if the Company is acting as its own Paying Agent, segregate and
hold in trust as provided in Section 10.3) an amount of money (which shall be in
immediately available funds on such Redemption Date) sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest (including Liquidated Damages, if any) to the
Redemption Date on, all the Securities which are to be redeemed on that date
other than any Securities called for redemption on that date which have been
converted prior to the date of such deposit.
If any Security called for redemption is converted, any money deposited
with the Trustee or so segregated and held in trust for the redemption of such
Security shall (subject to any right of the Holder of such Security or any
Predecessor Security to receive interest as provided in the last paragraph of
Section 3.7) be paid to the Company on Company Request or, if then held by the
Company, shall be discharged from such trust.
SECTION 11.7 Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price, including accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
Security for redemption in accordance with said notice such Security shall be
paid by the Company at the Redemption Price together with accrued and unpaid
interest (including Liquidated Damages, if any) to the Redemption Date;
provided, however, that installments of interest on Securities whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such on
the relevant Record Date according to their terms and the provisions of Section
3.7.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal amount of, premium, if any, and, to the
extent permitted by applicable law, accrued interest on such Security shall,
until paid, bear interest from the Redemption Date at a rate of 4% per annum and
such Security shall remain convertible until the Redemption Price of such
Security (or portion thereof, as the case may be) shall have been paid or duly
provided for.
Any Security which is to be redeemed only in part shall be surrendered at
the Corporate Trust Office or an office or agency of the Company designated for
that purpose pursuant to Section 10.2 (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and make available for delivery to the Holder of
such Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
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SECTION 11.8 Conversion Arrangement on Call for Redemption.
---------------------------------------------
In connection with any redemption of Securities, the Company may arrange
for the purchase and conversion of any Securities by an agreement with one or
more investment bankers or other purchasers (the "Purchasers") to purchase such
securities by paying to the Trustee in trust for the Holders, on or before the
Redemption Date, an amount not less than the applicable Redemption Price,
together with interest accrued to the Redemption Date, of such Securities.
Notwithstanding anything to the contrary contained in this Article XI, the
obligation of the Company to pay the Redemption Price, together with interest
accrued to the Redemption Date, shall be deemed to be satisfied and discharged
to the extent such amount is so paid by such Purchasers. If such an agreement is
entered into (a copy of which shall be filed with the Trustee prior to the close
of business on the Business Day immediately prior to the Redemption Date), any
Securities called for redemption that are not duly surrendered for conversion by
the Holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, and consistent with any agreement or agreements with
such Purchasers, to be acquired by such Purchasers from such Holders and
(notwithstanding anything to the contrary contained in Article XII) surrendered
by such Purchasers for conversion, all as of immediately prior to the close of
business on the Redemption Date (and the right to convert any such Securities
shall be extended through such time), subject to payment of the above amount as
aforesaid. At the direction of the Company, the Trustee shall hold and dispose
of any such amount paid to it by the Purchasers to the Holders in the same
manner as it would monies deposited with it by the Company for the redemption of
Securities. Without the Trustee's prior written consent, no arrangement between
the Company and such Purchasers for the purchase and conversion of any
Securities shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Trustee as set forth in this Indenture,
and the Company agrees to indemnify the Trustee from, and hold it harmless
against, any loss, liability or expense arising out of or in connection with any
such arrangement for the purchase and conversion of any Securities between the
Company and such Purchasers, including the costs and expenses, including
reasonable legal fees, incurred by the Trustee in the defense of any claim or
liability arising out of or in connection with the exercise or performance of
any of its powers, duties, responsibilities or obligations under this Indenture.
ARTICLE XII
CONVERSION OF SECURITIES
SECTION 12.1 Conversion Privilege and Conversion Rate.
----------------------------------------
Subject to and upon compliance with the provisions of this Article, at the
option of the Holder thereof, any Security may be converted into fully paid and
nonassessable shares (calculated as to each conversion to the nearest 1/100th of
a share) of Common Stock of the Company at the Conversion Rate, determined as
hereinafter provided, in effect at the time of conversion. Such conversion
right shall commence on or after the 90th day following the initial issuance
date of the Securities and expire at the close of business on the date of
Maturity, subject, in the case of
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conversion of any Global Security, to any Applicable Procedures. In case a
Security or portion thereof is called for redemption at the election of the
Company or the Holder thereof exercises his right to require the Company to
repurchase the Security, such conversion right in respect of the Security, or
portion thereof so called, shall expire at the close of business on the
Redemption Date or the Repurchase Date, as the case may be, unless the Company
defaults in making the payment due upon redemption or repurchase, as the case
may be (in each case subject as aforesaid to any Applicable Procedures with
respect to any Global Security).
The rate at which shares of Common Stock shall be delivered upon conversion
(herein called the "Conversion Rate") shall be initially 37.8698 shares of
Common Stock for each U.S.$1,000 principal amount of Securities. The Conversion
Rate shall be adjusted in certain instances as provided in this Article XII.
SECTION 12.2 Exercise of Conversion Privilege.
--------------------------------
In order to exercise the conversion privilege, the Holder of any Security
to be converted shall surrender such Security, duly endorsed in blank, at any
office or agency of the Company maintained for that purpose pursuant to Section
10.2, accompanied by a duly signed conversion notice substantially in the form
set forth in Section 2.4 stating that the Holder elects to convert such Security
or, if less than the entire principal amount thereof is to be converted, the
portion thereof to be converted. Each Security surrendered for conversion (in
whole or in part) during the Record Date Period shall (except in the case of any
Security or portion thereof which has been called for redemption on a Redemption
Date, or is repurchasable on a Repurchase Date, occurring, in either case,
within such Record Date Period and, as a result, the right to convert would
terminate in such period) be accompanied by payment in New York Clearing House
funds or other funds acceptable to the Company of an amount equal to the
interest payable on such Interest Payment Date on the principal amount of such
Security (or part thereof, as the case may be) being surrendered for conversion.
The interest so payable on such Interest Payment Date with respect to any
Security (or portion thereof, if applicable) which is surrendered for conversion
during the Record Date Period shall be paid to the Holder of such Security as of
such Regular Record Date in an amount equal to the interest that would have been
payable on such Security if such Security had been converted as of the close of
business on such Interest Payment Date. Interest payable in respect of any
Security surrendered for conversion on or after an Interest Payment Date shall
be paid to the Holder of such Security as of the next preceding Regular Record
Date, notwithstanding the exercise of the right of conversion. Except as
provided in this paragraph and subject to the last paragraph of Section 3.7, no
cash payment or adjustment shall be made upon any conversion on account of any
interest accrued from the Interest Payment Date next preceding the conversion
date, in respect of any Security (or part thereof, as the case may be)
surrendered for conversion, or on account of any dividends on the Common Stock
issued upon conversion. The Company's delivery to the Holder of the number of
shares of Common Stock (and cash in lieu of fractions thereof, as provided in
this Indenture) into which a Security is convertible will be deemed to satisfy
the Company's obligation to pay the principal amount of the Security.
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Securities shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Securities for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and deliver to the Trustee, for delivery to the Holder, a
certificate or certificates for the number of full shares of Common Stock
issuable upon conversion, together with payment in lieu of any fraction of a
share, as provided in Section 12.3.
All shares of Common Stock delivered upon such conversion of Restricted
Securities shall bear restrictive legends substantially in the form of the
legends required to be set forth on the Restricted Securities pursuant to
Section 3.5 and shall be subject to the restrictions on transfer provided in
such legends. Neither the Trustee nor any agent maintained for the purpose of
such conversion shall have any responsibility for the inclusion or content of
any such restrictive legends on such Common Stock; provided, however, that the
Trustee or any agent maintained for the purpose of such conversion shall have
provided, to the Company or to the Company's transfer agent for such Common
Stock, prior to or concurrently with a request to the Company to deliver such
Common Stock, written notice that the Securities delivered for conversion are
Restricted Securities.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in an aggregate principal amount equal to
the unconverted portion of the principal amount of such Security. A Security may
be converted in part, but only if the principal amount of such Security to be
converted is any integral multiple of U.S. $1,000 and the principal amount of
such security to remain Outstanding after such conversion is equal to U.S.
$1,000 or any integral multiple of $1,000 in excess thereof.
If shares of Common Stock to be issued upon conversion of a Restricted
Security, or Securities to be issued upon conversion of a Restricted Security in
part only, are to be registered in a name other than that of the beneficial
owner of such Restricted Security, then such Holder must deliver to the
Conversion Agent a Surrender Certificate, dated the date of surrender of such
Restricted Security and signed by such beneficial owner, as to compliance with
the restrictions on transfer applicable to such Restricted Security. Neither the
Trustee nor any Conversion Agent, Registrar or Transfer Agent shall be required
to register in a name other than that of the beneficial owner, shares of Common
Stock or Securities issued upon conversion of any such Restricted Security not
so accompanied by a properly completed Surrender Certificate.
SECTION 12.3 Fractions of Shares.
-------------------
No fractional shares of Common Stock shall be issued upon conversion of any
Security or Securities. If more than one Security shall be surrendered for
conversion at one time by the same Holder, the number of full shares which shall
be issuable upon conversion thereof shall be computed
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on the basis of the aggregate principal amount of the Securities (or specified
portions thereof) so surrendered. Instead of any fractional share of Common
Stock which would otherwise be issuable upon conversion of any Security or
Securities (or specified portions thereof), the Company shall calculate and pay
a cash adjustment in respect of such fraction (calculated to the nearest 1/100th
of a share) in an amount equal to the same fraction of the Closing Price Per
Share at the close of business on the day of conversion.
SECTION 12.4 Adjustment of Conversion Rate.
-----------------------------
The Conversion Rate shall be subject to adjustments from time to time as
follows:
(1) In case the Company shall pay or make a dividend or other distribution
on shares of any class of capital stock payable in shares of Common Stock, the
Conversion Rate in effect at the opening of business on the day following the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be increased by dividing such Conversion
Rate by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other distribution,
such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. If, after any such date
fixed for determination, any dividend or distribution is not in fact paid, the
Conversion Rate shall be immediately readjusted, effective as of the date the
Board of Directors determines not to pay such dividend or distribution, to the
Conversion Rate that would have been in effect if such determination date had
not been fixed. For the purposes of this paragraph (1), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.
(2) In case the Company shall issue rights, options or warrants to all
holders of its Common Stock entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than the current market price per
share (determined as provided in paragraph (8) of this Section 12.4) of the
Common Stock on the date fixed for the determination of stockholders entitled to
receive such rights, options or warrants (other than any rights, options or
warrants that by their terms will also be issued to any Holder upon conversion
of a Security into shares of Common Stock without any action required by the
Company or any other Person), the Conversion Rate in effect at the opening of
business on the day following the date fixed for such determination shall be
increased by dividing such Conversion Rate by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase would purchase at
such current market price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such increase to become effective immediately after
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the opening of business on the day following the date fixed for such
determination. If, after any such date fixed for determination, any such rights,
options or warrants are not in fact issued, or are not exercised prior to the
expiration thereof, the Conversion Rate shall be immediately readjusted,
effective as of the date such rights, options or warrants expire, or the date
the Board of Directors determines not to issue such rights, options or warrants,
to the Conversion Rate that would have been in effect if the unexercised rights,
options or warrants had never been granted or such determination date had not
been fixed, as the case may be. For the purposes of this paragraph (2), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company will not issue any rights, options or warrants in respect of
shares of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Conversion Rate in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Rate in effect at the opening of business
on the day following the day upon which such subdivision or combination becomes
effective shall be proportionately reduced, such increase or reduction, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(4) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness, shares of any class
of capital stock or other assets (including securities, but excluding (i) any
rights, options or warrants referred to in paragraph (2) of this Section, (ii)
any dividend or distribution paid exclusively in cash, (iii) any dividend or
distribution referred to in paragraph (1) of this Section and (iv) mergers or
consolidations to which Section 12.11 applies), the Conversion Rate shall be
adjusted so that the same shall equal the rate determined by dividing the
Conversion Rate in effect immediately prior to the close of business on the date
fixed for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the current market
price per share (determined as provided in paragraph (8) of this Section 12.4)
of the Common Stock on the date fixed for such determination less the then fair
market value (as determined by the Board of directors, whose determination shall
be conclusive and described in a Board Resolution filed with the Trustee) of the
portion of the assets, shares or evidences of indebtedness so distributed
applicable to one share of Common Stock and the denominator shall be such
current market price per share of the Common Stock, such adjustment to become
effective immediately prior to the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
distribution. If after any such date fixed for determination, any such
distribution is not in fact made, the Conversion Rate shall be immediately
readjusted, effective as of the date of the Board of Directors determines not to
make such distribution, to the Conversion Rate that would have been in effect if
such determination date had not been fixed.
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(5) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any cash that is distributed as part
of a distribution referred to in paragraph (4) of this Section or cash
distributed upon a merger or consolidation to which Section 12.11 applies) in an
aggregate amount that, combined together with (I) the aggregate amount of any
other all-cash distributions to all holders of its Common Stock made exclusively
in cash within the 12 months preceding the date of payment of such distribution
and in respect of which no adjustment pursuant to this paragraph (5) has been
made and (II) the aggregate of any cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) of consideration payable in respect of any
tender offer by the Company or any of its Subsidiaries for all or any portion of
the Common Stock concluded within the 12 months preceding the date of payment of
such distribution and in respect of which no adjustment pursuant to paragraph
(6) of this Section 12.4 has been made (the "combined cash and tender amount")
exceeds 10% of the product of the current market price per share (determined as
provided in paragraph (8) of this Section 12.4) of the Common Stock on the date
for the determination of holders of shares of Common Stock entitled to receive
such distribution times the number of shares of Common Stock outstanding on such
date (the "aggregate current market price"), then, and in each such case,
immediately after the close of business on such date for determination, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate in effect immediately prior to the
close of business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (i) the numerator of which
shall be equal to the current market price per share (determined as provided in
paragraph (8) of this Section) of the Common Stock on the date fixed for such
determination less an amount equal to the quotient of (x) the excess of such
combined cash and tender amount over such aggregate current market price divided
by (y) the number of shares of Common Stock outstanding on such date for
determination and (ii) the denominator of which shall be equal to the current
market price per share (determined as provided in paragraph (8) of this Section
12.4) of the Common Stock on such date fixed for determination.
(6) In case a tender offer made by the Company or any Subsidiary for all or
any portion of the Common Stock shall expire and such tender offer (as amended
upon the expiration thereof) shall require the payment to stockholders (based on
the acceptance (up to any maximum specified in the terms of the tender offer) of
Purchased Shares (as defined below)) of an aggregate consideration having a fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution) that combined together with
(I) the aggregate of the cash plus the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and described in a
Board Resolution), as of the expiration of such tender offer, of consideration
payable in respect of any other tender offer by the Company or any Subsidiary
for all or any portion of the Common Stock expiring within the 12 months
preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to this paragraph (6) has been made and (II) the aggregate
amount of any cash distributions to all holders of the Common Stock within 12
months preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to paragraph (5) of this Section has been made (the
"combined tender and cash amount") exceeds 10% of the product of the current
market price per share of the Common Stock (determined as provided in paragraph
(8) of this Section 12.4) as of the last time (the "Expiration Time") tenders
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could have been made pursuant to such tender offer (as it may be amended) times
the number of shares of Common Stock outstanding (including any tendered shares)
as of the Expiration Time, then, and in each such case immediately prior to the
opening of business on the day after the date of the Expiration Time, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate immediately prior to close of
business on the date of the Expiration Time by a fraction (i) the numerator of
which shall be equal to (A) the product of (I) the current market price per
share of the Common Stock (determined as provided in paragraph (8) of this
Section 12.4) on the date of the Expiration Time multiplied by (II) the number
of shares of Common Stock outstanding (including any tendered shares) on the
Expiration Time less (B) the combined tender and cash amount, and (ii) the
denominator of which shall be equal to the product of (A) the current market
price per share of the Common Stock (determined as provided in paragraph (8) of
this Section 12.4) as of the Expiration Time multiplied by (B) the number of
shares of Common Stock outstanding (including any tendered shares) as of the
Expiration Time less the number of all shares validly tendered and not withdrawn
as of the Expiration Time (the shares deemed so accepted up to any such maximum,
being referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into securities other than Common
Stock (other than any reclassification upon a consolidation or merger to which
Section 12.11 applies) shall be deemed to involve (a) a distribution of such
securities other than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be "the date fixed
for the determination of stockholders entitled to receive such distribution" and
"the date fixed for such determination" within the meaning of paragraph (4) of
this Section), and (b) a subdivision or combination, as the case may be, of the
number of shares of Common Stock outstanding immediately prior to such
reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification shall be
deemed to be "the day upon which such subdivision becomes effective" or "the day
upon which such combination becomes effective", as the case may be, and "the day
upon which such subdivision or combination becomes effective" within the meaning
of paragraph (3) of this Section 12.4).
(8) For the purpose of any computation under paragraphs (2), (4), (5) or
(6) of this Section 12.4, the current market price per share of Common Stock on
any date shall be calculated by the Company and be the average of the daily
Closing Prices Per Share for the five consecutive Trading Days selected by the
Company commencing not more than 10 Trading Days before, and ending not later
than the earlier of the day in question and the day before the "ex" date with
respect to the issuance or distribution requiring such computation. For purposes
of this paragraph, the term "'ex' date", when used with respect to any issuance
or distribution, means the first date on which the Common Stock trades regular
way in the applicable securities market or on the applicable securities exchange
without the right to receive such issuance or distribution.
(9) No adjustment in the Conversion Rate shall be required unless such
adjustment (plus any adjustments not previously made by reason of this paragraph
(9)) would require an increase or decrease of at least one percent in such rate;
provided, however, that any adjustments which by reason of this paragraph (9)
are not required to be made shall be carried forward and taken into
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account in any subsequent adjustment. All calculations under this Article shall
be made to the nearest cent or to the nearest one-hundredth of a share, as the
case may be.
(10) The Company may make such increases in the Conversion Rate, for the
remaining term of the Securities or any shorter term, in addition to those
required by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 12.4, as
it considers to be advisable in order to avoid or diminish any income tax to any
holders of shares of Common Stock resulting from any dividend or distribution of
stock or issuance of rights or warrants to purchase or subscribe for stock or
from any event treated as such for income tax purposes. The Company shall have
the power to resolve any ambiguity or correct any error in this paragraph (10)
and its actions in so doing shall, absent manifest error, be final and
conclusive.
(11) Notwithstanding the foregoing provisions of this Section, no
adjustment of the Conversion Rate shall be required to be made (a) upon the
issuance of shares of Common Stock pursuant to any present or future plan for
the reinvestment of dividends or (b) because of a tender or exchange offer of
the character described in Rule 13e-4(h)(5) under the Exchange Act or any
successor rule thereto.
(12) To the extent permitted by applicable law, the Company from time to
time may increase the Conversion Rate by any amount for any period of time if
the period is at least twenty (20) days, the increase is irrevocable during such
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; provided, however, that no such increase shall be taken
into account for purposes of determining (i) whether the Closing Price Per Share
of the Common Stock equals or exceeds 105% of the Conversion Price in connection
with an event which would otherwise be a Change of Control pursuant to Section
14.4, or (ii) whether the Closing Price Per Share of the Common Stock exceeds
140% of the Conversion Price in connection with redemption of the Securities in
accordance with the provisions of the form of Securities set forth in Section
2.2 hereof. Whenever the Conversion Rate is increased pursuant to the preceding
sentence, the Company shall give notice of the increase to the Holders in the
manner provided in Section 1.6 at least fifteen (15) days prior to the date the
increased Conversion Rate takes effect, and such notice shall state the
increased Conversion Rate and the period during which it will be in effect.
SECTION 12.5 Notice of Adjustments of Conversion Rate.
----------------------------------------
Whenever the Conversion Rate is adjusted as herein provided:
(1) the Company shall compute the adjusted Conversion Rate in accordance
with Section 12.4 and shall prepare a certificate signed by the Chief Financial
Officer of the Company setting forth the adjusted Conversion Rate and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall promptly be filed with the Trustee and with each Conversion
Agent; and
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(2) upon each such adjustment, a notice stating that the Conversion Rate
has been adjusted and setting forth the adjusted Conversion Rate shall be
required, and as soon as practicable after it is required, such notice shall be
provided by the Company to all Holders in accordance with Section 1.6.
Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours, and shall not be deemed to have knowledge of any adjustment in the
Conversion Rate unless and until a Responsible Officer of the Trustee shall have
received such a certificate. Until a Responsible Officer of the Trustee
receives such a certificate, the Trustee and each Conversion Agent may assume
without inquiry that the last Conversion Rate of which the Trustee has knowledge
of remains in effect.
SECTION 12.6 Notice of Certain Corporate Action.
----------------------------------
In case:
(1) the Company shall declare a dividend (or any other distribution) on its
Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively
in cash in an amount that would require any adjustment pursuant to Section 12.4;
or
(2) the Company shall authorize the granting to all or substantially all of
the holders of its Common Stock of rights, options or warrants to subscribe for
or purchase any shares of capital stock of any class or of any other rights; or
(3) of any reclassification of the Common Stock, or of any consolidation,
merger or share exchange to which the Company is a party and for which approval
of any stockholders of the Company is required, or of the conveyance, sale,
transfer or lease of all or substantially all of the assets of the Company; or
(4) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company; then the Company shall cause to be filed at each office or
agency maintained for the purpose of conversion of Securities pursuant to
Section 10.2, and shall cause to be provided to all Holders in accordance with
Section 1.6, at least 20 days (or 10 days in any case specified in clause (1) or
(2) above) prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights, options or warrants, or, if
a record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights, options or
warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, sale, lease, dissolution, liquidation or
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winding up. Neither the failure to give such notice or the notice referred to in
the following paragraph nor any defect therein shall affect the legality or
validity of the proceedings described in clauses (1) through (4) of this Section
12.6. If at the time the Trustee shall not be the conversion agent, a copy of
such notice shall also forthwith be filed by the Company with the Trustee.
The Company shall cause to be filed at the Corporate Trust Office and each
office or agency maintained for the purpose of conversion of Securities pursuant
to Section 10.2, and shall cause to be provided to all Holders in accordance
with Section 1.6, notice of any tender offer by the Company or any Subsidiary
for all or any portion of the Common Stock at or about the time that such notice
of tender offer is provided to the public generally.
SECTION 12.7 Company to Reserve Common Stock.
-------------------------------
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock then issuable upon the conversion of all Outstanding Securities.
SECTION 12.8 Taxes on Conversions.
--------------------
Except as provided in the next sentence, the Company will pay any and all
taxes and duties that may be payable in respect of the issue or delivery of
shares of Common Stock on conversion of Securities pursuant hereto. The Company
shall not, however, be required to pay any tax or duty which may be payable in
respect of any transfer involved in the issue and delivery of shares of Common
Stock in a name other than that of the Holder of the Security or Securities to
be converted, and no such issue or delivery shall be made unless and until the
Person requesting such issue has paid to the Company the amount of any such tax
or duty, or has established to the satisfaction of the Company that such tax or
duty has been paid.
SECTION 12.9 Covenant as to Common Stock.
---------------------------
The Company agrees that all shares of Common Stock which may be delivered
upon conversion of Securities, upon such delivery, will have been duly
authorized and validly issued and will be fully paid and nonassessable and,
except as provided in Section 12.8, the Company will pay all taxes, liens and
charges with respect to the issue thereof.
SECTION 12.10 Cancellation of Converted Securities.
------------------------------------
All Securities delivered for conversion shall be delivered to the Trustee
or its agent to be canceled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 3.9.
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SECTION 12.11 Provision in Case of Consolidation, Merger or Sale of Assets.
-----------------------------------------------------
In case of any consolidation or merger of the Company with or into any
other Person, any merger of another Person with or into the Company (other than
a merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company) or any
conveyance, sale, transfer or lease of all or substantially all of the assets of
the Company, the Person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then Outstanding shall have the right thereafter, during the
period such Security shall be convertible as specified in Section 12.1, to
convert such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease by a holder of the number of shares of Common Stock of the
Company into which such Security might have been converted immediately prior to
such consolidation, merger, conveyance, sale, transfer or lease, assuming such
holder of Common Stock of the Company (i) is not (A) a Person with which the
Company consolidated or merged with or into or which merged into or with the
Company or to which such conveyance, sale, transfer or lease was made, as the
case may be (a "Constituent Person"), or (B) an Affiliate of a Constituent
Person and (ii) failed to exercise his rights of election, if any, as to the
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease (provided that if the
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer, or lease is not the same for
each share of Common Stock of the Company held immediately prior to such
consolidation, merger, conveyance, sale, transfer or lease by others than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-electing Share"), then for the
purpose of this Section 12.11 the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale, transfer
or lease by the holders of each Non-electing Share shall be deemed to be the
kind and amount so receivable per share by a plurality of the Non-electing
Shares), and further assuming, if such consolidation, merger, conveyance,
transfer, sale or lease occurs prior to the 90th day following the last original
issue date of the Securities, that the Security was convertible at the time of
such occurrence at the Conversion Rate specified in Section 12.1 as adjusted
from the issue date of such Security to such time as provided in this Article
XII. Such supplemental indenture shall provide for adjustments which, for events
subsequent to the effective date of such supplemental indenture, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article. The above provisions of this Section 12.11 shall similarly apply to
successive consolidations, mergers, conveyances, sales, transfers or leases.
Notice of the execution of such a supplemental indenture shall be given by the
Company to the Holder of each Security as provided in Section 1.6 promptly upon
such execution.
Neither the Trustee nor any Conversion Agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or other securities or property or cash receivable by Holders of
Securities upon the conversion of their Securities after any such consolidation,
merger, conveyance, transfer, sale or lease or to any such adjustment, but may
accept as conclusive evidence of the
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correctness of any such provisions, and shall be protected in relying upon, an
Opinion of Counsel with respect thereto, which the Company shall cause to be
furnished to the Trustee upon request.
SECTION 12.12 Rights Issued in Respect of Common Stock.
----------------------------------------
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 12.4(2) 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
12.4(2), (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 Price shall be readjusted
as if such issuance had not occurred.
SECTION 12.13 Responsibility of Trustee for Conversion Provisions.
---------------------------------------------------
The Trustee, subject to the provisions of Section 6.1, and any Conversion
Agent shall not at any time be under any duty or responsibility to any Holder of
Securities to determine whether any facts exist which may require any adjustment
of the Conversion Rate, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, herein or in any
supplemental indenture provided to be employed, in making the same, or whether a
supplemental indenture need be entered into. Neither the Trustee, subject to the
provisions of Section 6.1, nor any Conversion Agent shall be accountable with
respect to the validity or value (or the kind or amount) of any Common Stock, or
of any other securities or property or cash, which may at any time be issued or
delivered upon the conversion of any Security; and it or they do not make any
representation with respect thereto. Neither the Trustee, subject to the
provisions of Section 6.1, nor any Conversion Agent shall be responsible for any
failure of the Company to make or calculate any cash payment or to issue,
transfer or deliver any shares of Common Stock or share certificates or other
securities or property or cash upon the surrender of any Security for the
purpose of conversion;
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and the Trustee, subject to the provisions of Section 6.1, and any Conversion
Agent shall not be responsible for any failure of the Company to comply with any
of the covenants of the Company contained in this Article.
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1 Securities Subordinate to Senior Indebtedness.
---------------------------------------------
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article (subject to the provisions of
Article IV), the indebtedness represented by the Securities and the payment of
the principal of, or premium, if any, or interest (including Liquidated Damages,
if any) on, each and all of the Securities (including, but not limited to, the
Redemption Price with respect to the Securities to be called for redemption in
accordance with Article XI or the Repurchase Price with respect to Securities
submitted for repurchase in accordance with Article XIV), are hereby expressly
made subordinate and subject in right of payment to the prior payment in full of
all Senior Indebtedness.
SECTION 13.2 No Payment in Certain Circumstances, Payment over of Proceeds
-------------------------------------------------------------
upon Dissolution, Etc.
----------------------
No payment shall be made with respect to the principal of, or premium, if
any, or interest (including Liquidated Damages, if any) on the Securities
(including, but not limited to, the Redemption Price with respect to the
Securities to be called for redemption in accordance with Article XI or the
Repurchase Price with respect to Securities submitted for repurchase in
accordance with Article XIV), except payments and distributions made by the
Trustee as permitted by Section 13.9, if:
(i) a default in the payment of principal, premium, if any, or
interest (including a default under any repurchase or redemption obligation) or
other amounts with respect to any Senior Indebtedness occurs and is continuing
(or, in the case of Senior Indebtedness for which there is a period of grace, in
the event of such a default that continues beyond the period of grace, if any,
specified in the instrument or lease evidencing such Senior Indebtedness) unless
and until such default shall have been cured or waived or shall have ceased to
exist; or
(ii) any other event of default occurs and is continuing with respect
to Designated Senior Debt that then permits holders of such Designated Senior
Debt to accelerate its maturity and the Trustee receives a notice of the default
(a "Payment Blockage Notice") from a Representative or holder of Designated
Senior Debt or the Company.
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If the Trustee receives any Payment Blockage Notice pursuant to clause (ii)
above, no subsequent Payment Blockage Notice shall be effective for purposes of
this Section unless and until (A) at least 365 days shall have elapsed since the
initial effectiveness of the immediately prior Payment Blockage Notice, and (B)
all scheduled payments of principal, premium, if any, and interest on the
Securities that have come due have been paid in full in cash. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice.
The Company may and shall resume payments on and distributions in respect
of the Securities upon the earlier of:
(1) in the case of a default referred to in clause (i) above, the date upon
which the default is cured or waived or ceases to exist, or
(2) in the case of a default referred to in clause (ii) above, the date
upon which the default is cured or waived or ceases to exist or 179 days pass
after notice is received if the maturity of such Designated Senior Debt has not
been accelerated, unless this Article XIII otherwise prohibits the payment or
distribution at the time of such payment or distribution.
In the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as such, or
to its assets, or (b) any liquidation, dissolution or other winding up of the
Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of the Company, then and in any
such event the holders of Senior Indebtedness shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Indebtedness in cash before the Holders of the Securities are entitled to
receive any payment on account of principal of (or premium, if any) or interest
(including any Liquidated Damages) on the Securities or on account of the
purchase, redemption or other acquisition of Securities, and to that end the
holders of Senior Indebtedness shall be entitled to receive, for application to
the payment thereof, any payment or distribution of any kind or character,
whether in cash, property or securities, which may be payable or deliverable in
respect of the Securities in any such case, proceeding, dissolution, liquidation
or other winding up or event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, securities or other property, before all Senior Indebtedness is
paid in full, and if such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee or, as the case may be, such
Holder, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
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For purposes of this Article only, the words "cash, securities or other
property" shall not be deemed to include shares of capital stock of the Company
as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, which
shares of stock or securities are subordinated in right of payment to all then
outstanding Senior Indebtedness to substantially the same extent as, or to a
greater extent than, the Securities are so subordinated as provided in this
Article. The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in Article
VII shall not be deemed a dissolution, winding up, liquidation, reorganization,
assignment for the benefit of creditors or marshaling of assets and liabilities
of the Company for the purposes of this Section if the Person formed by such
consolidation or into which the Company is merged or which acquires by
conveyance or transfer such properties and assets substantially as an entirety,
as the case may be, shall, as a part of such consolidation, merger, conveyance
or transfer, comply with the conditions set forth in Article VII.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company, in the case of the Trustee, or the Trustee,
in the case of such Holder.
SECTION 13.3 Prior Payment to Senior Indebtedness upon Acceleration of
---------------------------------------------------------
Securities.
----------
In the event of the acceleration of the Securities because of an Event of
Default, no payment or distribution shall be made to the Trustee or any holder
of Securities in respect of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Securities (including, but not
limited to, the Redemption Price with respect to the Securities called for
redemption in accordance with Article XI or the Repurchase Price with respect to
the Securities submitted for repurchase in accordance with Article XIV), except
payments and distributions made by the Trustee as permitted by Section 13.9,
until all Senior Indebtedness has been paid in full in cash or other payment
satisfactory to the holders of Senior Indebtedness or such acceleration is
rescinded in accordance with the terms of this Indenture. If payment of the
Securities is accelerated because of an Event of Default, the Company shall
promptly notify holders of Senior Indebtedness of the acceleration.
SECTION 13.4 Payment Permitted If No Default.
-------------------------------
Nothing contained in this Article or elsewhere in this Indenture or in any
of the Securities shall prevent (a) the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshaling of assets and
liabilities of the Company referred to in Section 13.2, or during the
circumstances referred to in the first paragraph of Section 13.2, or under the
conditions described in Section 13.3, from making payments at any time of
principal of (and premium, if any) or interest on the Securities, or (b) the
application by the Trustee of any money deposited with it hereunder to the
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payment of or on account of the principal of (and premium, if any) or interest
on the Securities or the retention of such payment by the Holders, if, at the
time of such application by the Trustee, it did not have knowledge that such
payment would have been prohibited by the provisions of this Article.
SECTION 13.5 Subrogation to Rights of Holders of Senior Indebtedness.
-------------------------------------------------------
Subject to the payment in full of all Senior Indebtedness, the Holders of the
Securities shall be subrogated to the extent of the payments or distributions
made to the holders of such Senior Indebtedness pursuant to the provisions of
this Article to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of (and premium, if any) and interest on
the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and no payments
over pursuant to the provisions of this Article to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Indebtedness and the Holders
of the Securities, be deemed to be a payment or distribution by the Company to
or on account of the Senior Indebtedness.
SECTION 13.6 Provisions Solely to Define Relative Rights.
-------------------------------------------
The provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (i) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders of the
Securities the principal of (and premium, if any) and interest (including
Liquidated Damages, if any) on the Securities as and when the same shall become
due and payable in accordance with their terms; or (ii) affect the relative
rights against the Company of the Holders of the Securities and creditors of the
Company other than the holders of Senior Indebtedness; or (iii) prevent the
Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Indebtedness to
receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder.
SECTION 13.7 Trustee to Effectuate Subordination.
-----------------------------------
Each Holder of a Security by its acceptance thereof authorizes and directs the
Trustee on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and appoints the Trustee
its attorney-in-fact for any and all such purposes.
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SECTION 13.8 No Waiver of Subordination Provisions.
-------------------------------------
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company,
or by any non-compliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
SECTION 13.9 Notice to Trustee.
-----------------
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until a Responsible Officer of the Trustee shall have received written
notice thereof from the Company or a Representative or a holder of Senior
Indebtedness (including, without limitation, a holder of Designated Senior Debt)
and, prior to the receipt of any such written notice, the Trustee, subject to
the provisions of Section 6.1, shall be entitled in all respects to assume that
no such facts exist; provided, however, that if the Trustee shall not have
received the notice provided for in this Section 13.9 at least two Business Days
prior to the date upon which by the terms hereof any money may become payable
for any purpose (including, without limitation, the payment of the principal of
(and premium, if any) or interest (including Liquidated Damages, if any) on any
Security), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money and to apply
the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within one
Business Day prior to such date.
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Notwithstanding anything in this Article XIII to the contrary, nothing
shall prevent any payment by the Trustee to the Holders of monies deposited with
it pursuant to Section 4.1, and any such payment shall not be subject to the
provisions of Section 13.2 or 13.3.
Subject to the provisions of Section 6.1, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a Representative or a holder of Senior Indebtedness (including, without
limitation, a holder of Designated Senior Debt) to establish that such notice
has been given by a Representative or a holder of Senior Indebtedness
(including, without limitation, a holder of Designated Senior Debt). In the
event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 13.10 Reliance on Judicial Order or Certificate of Liquidating Agent.
--------------------------------------------------------------
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 13.11 Trustee Not Fiduciary for Holders of Senior Indebtedness.
--------------------------------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or securities to which any holders
of Senior Indebtedness shall be entitled by virtue of this Article or otherwise.
SECTION 13.12 Reliance by Holders of Senior Indebtedness on Subordination
-----------------------------------------------------------
Provisions.
----------
Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Indebtedness, whether such
Senior Indebtedness was created or acquired before
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or after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness, and no amendment or modification of the provisions
contained herein shall diminish the rights of such holders of Senior
Indebtedness unless such holders shall have agreed in writing thereto.
SECTION 13.13 Rights of Trustee as Holder of Senior Indebtedness; Preservation
----------------------------------------------------------------
of Trustee's Rights.
-------------------
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7.
SECTION 13.14 Article Applicable to Paying Agents.
-----------------------------------
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context otherwise requires)
be construed as extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent were named in this
Article in addition to or in place of the Trustee; provided, however, that
Section 13.13 shall not apply to the Company or any Affiliate of the Company if
it or such Affiliate acts as Paying Agent.
SECTION 13.15 Certain Conversions and Repurchases Deemed Payment.
--------------------------------------------------
For the purposes of this Article only, (i) the issuance and delivery of
junior securities upon conversion of Securities in accordance with Article XII
or upon the repurchase of Securities in accordance with Article XIV shall not be
deemed to constitute a payment or distribution on account of the principal of or
premium or interest (including Liquidated Damages, if any) on Securities or on
account of the purchase or other acquisition of Securities, and (ii) the
payment, issuance or delivery of cash (except in satisfaction of fractional
shares pursuant to Section 12.3), property or securities (other than junior
securities) upon conversion of a Security shall be deemed to constitute payment
on account of the principal of such Security. For the purposes of this Section,
the term "junior securities" means (a) shares of any stock of any class of the
Company and securities into which the Securities are convertible pursuant to
Article XII and (b) securities of the Company which are subordinated in right of
payment to all Senior Indebtedness which may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as, or
to a greater extent than, the Securities are so subordinated as provided in this
Article. Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the right,
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which is absolute and unconditional, of the Holder of any Security to convert
such Security in accordance with Article XII or to exchange such Security for
Common Stock in accordance with Article XIV if the Company elects to satisfy the
obligations under Article XIV by the delivery of Common Stock.
ARTICLE XIV
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL
SECTION 14.1 Right to Require Repurchase.
---------------------------
In the event that a Change in Control (as hereinafter defined) shall occur,
then each Holder shall have the right, at the Holder's option, but subject to
the provisions of Section 14.2, to require the Company to repurchase, and upon
the exercise of such right the Company shall repurchase, all of such Holder's
Securities not theretofore called for redemption, or any portion of the
principal amount thereof that is equal to U.S. $5,000 or any integral multiple
of U.S. $1,000 in excess thereof (provided that no single Security may be
repurchased in part unless the portion of the principal amount of such Security
to be Outstanding after such repurchase is equal to U.S. $1,000 or integral
multiples of U.S. $1,000 in excess thereof), on the date (the "Repurchase Date")
that is 45 days after the date of the Company Notice (as defined in Section
14.3) at a purchase price equal to 100% of the principal amount of the
Securities to be repurchased plus interest accrued to the Repurchase Date (the
"Repurchase Price"); provided, however, that installments of interest on
Securities whose Stated Maturity is on or prior to the Repurchase Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Record Date according to their
terms and the provisions of Section 3.7. Such right to require the repurchase of
the Securities shall not continue after a discharge of the Company from its
obligations with respect to the Securities in accordance with Article IV, unless
a Change in Control shall have occurred prior to such discharge. At the option
of the Company, the Repurchase Price may be paid in cash or, subject to the
fulfillment by the Company of the conditions set forth Section 14.2, by delivery
of shares of Common Stock having a fair market value equal to the Repurchase
Price. Whenever in this Indenture (including Sections 2.2, 3.1 , 5.1(1) and 5.8)
there is a reference, in any context, to the principal of any Security as of any
time, such reference shall be deemed to include reference to the Repurchase
Price payable in respect of such Security to the extent that such Repurchase
Price is, was or would be so payable at such time, and express mention of the
Repurchase Price in any provision of this Indenture shall not be construed as
excluding the Repurchase Price in those provisions of this Indenture when such
express mention is not made; provided, however, that for the purposes of Article
XIII such reference shall be deemed to include reference to the Repurchase Price
only to the extent the Repurchase Price is payable in cash.
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SECTION 14.2 Conditions to the Company's Election to Pay the Repurchase Price
----------------------------------------------------------------
in Common Stock.
---------------
The Company may elect to pay the Repurchase Price by delivery of shares of
Common Stock pursuant to Section 14.1 if and only if the following conditions
shall have been satisfied:
(1) The shares of Common Stock deliverable in payment of the Repurchase
Price shall have a fair market value as of the Repurchase Date of not less than
the Repurchase Price. For purposes of Section 14.1 and this Section 14.2, the
fair market value of shares of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the Closing Prices Per Share of the
Common Stock for the five consecutive Trading Days immediately preceding and
including the third Trading Day prior to the Repurchase Date;
(2) The Repurchase Price shall be paid only in cash in the event any shares
of Common Stock to be issued upon repurchase of Securities hereunder (i) require
registration under any federal securities law before such shares may be freely
transferrable without being subject to any transfer restrictions under the
Securities Act upon repurchase and if such registration is not completed or does
not become effective prior to the Repurchase Date, and/or (ii) require
registration with or approval of any governmental authority under any state law
or any other federal law before such shares may be validly issued or delivered
upon repurchase and if such registration is not completed or does not become
effective or such approval is not obtained prior to the Repurchase Date;
(3) Payment of the Repurchase Price may not be made in Common Stock unless
such stock is, or shall have been, approved for quotation on the Nasdaq National
Market or listed on a national securities exchange, in either case, prior to the
Repurchase Date; and
(4) All shares of Common Stock which may be issued upon repurchase of
Securities will be issued out of the Company's authorized but unissued Common
Stock and, will upon issue, be duly and validly issued and fully paid and non-
assessable and free of any preemptive or similar rights.
If all of the conditions set forth in this Section 14.2 are not satisfied
in accordance with the terms thereof, the Repurchase Price shall be paid by the
Company only in cash.
SECTION 14.3 Notices; Method of Exercising Repurchase Right, Etc.
---------------------------------------------------
(1) Unless the Company shall have theretofore called for redemption all of
the Outstanding Securities, on or before the 30th day after the occurrence of a
Change in Control, the Company or, at the request and expense of the Company on
or before the 15th day after such occurrence, the Trustee, shall give to all
Holders of Securities, in the manner provided in Section 1.6, notice (the
"Company Notice") of the occurrence of the Change of Control and of the
repurchase right set forth herein arising as a result thereof. The Company
shall also deliver a copy of such notice of a repurchase right to the Trustee.
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Each notice of a repurchase right shall state:
(i) the Repurchase Date,
(ii) the date by which the repurchase right must be exercised,
(iii) the Repurchase Price, and whether the Repurchase Price shall be
paid by the Company in cash or by delivery of shares of Common Stock,
(iv) a description of the procedure which a Holder must follow to
exercise a repurchase right, and the place or places where such Securities are
to be surrendered for payment of the Repurchase Price and accrued interest
(including Liquidated Damages, if any), if any to the Repurchase Date,
(v) that on the Repurchase Date the Repurchase Price, and accrued
interest (including liquidated Damages, if any), if any to the Repurchase Date,
will become due and payable upon each such Security designated by the Holder to
be repurchased, and that interest thereon shall cease to accrue on and after
said date,
(vi) the Conversion Rate then in effect, the date on which the right
to convert the principal amount of the Securities to be repurchased will
terminate and the place or places where such Securities may be surrendered for
conversion, and
(vii) the place or places that the Security certificate with the
Election of Holder to Require Repurchase as specified in Section 2.2 shall be
delivered, and if the Security is a Restricted Securities Certificate the place
or places that the Surrender Certificate required by Section 14.3(9) shall be
delivered.
No failure of the Company to give the foregoing notices or defect therein
shall limit any Holder' s right to exercise a repurchase right or affect the
validity of the proceedings for the repurchase of Securities.
If any of the foregoing provisions or other provisions of this Article XIV
are inconsistent with applicable law, such law shall govern.
(2) To exercise a repurchase right, a Holder shall deliver to the Trustee
on or before the 30th day after the date of the Company Notice (i) irrevocable
written notice of the Holder's exercise of such right, which notice shall set
forth the name of the Holder, the principal amount of the Securities to be
repurchased (and, if any Security is to repurchased in part, the serial number
thereof, the portion of the principal amount thereof to be repurchased and the
name of the Person in which the portion thereof to remain Outstanding after such
repurchase is to be registered) and a statement that an election to exercise the
repurchase right is being made thereby, and, in the event that the Repurchase
Price shall be paid in shares of Common Stock, the name or names (with
addresses) in which the certificate or certificates for shares of Common Stock
shall be issued, and (ii) the
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Securities with respect to which the repurchase right is being exercised. Such
written notice shall be irrevocable, except that the right of the Holder to
convert the Securities with respect to which the repurchase right is being
exercised shall continue until the close of business on the Repurchase Date.
(3) In the event a repurchase right shall be exercised in accordance with
the terms hereof, the Company shall pay or cause to be paid to the Trustee the
Repurchase Price in cash or shares of Common Stock, as provided above, for
payment to the Holder on the Repurchase Date or, if shares of Common Stock are
to be paid, as promptly after the Repurchase Date as practicable, together with
accrued and unpaid interest to the Repurchase Date payable with respect to the
Securities as to which the repurchase right has been exercised; provided,
however, that installments of interest that mature on or prior to the Repurchase
Date shall be payable in cash to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Regular Record Date.
(4) If any Security (or portion thereof) surrendered for repurchase shall
not be so paid on the Repurchase Date, the principal amount of such Security (or
portion thereof, as the case may be) shall, until paid, bear interest to the
extent permitted by applicable law from the Repurchase Date at the rate of 4%
per annum, and each Security shall remain convertible into Common Stock until
the principal of such Security (or portion thereof, as the case may be) shall
have been paid or duly provided for.
(5) Any Security which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Security without service charge, a new Security or Securities, containing
identical terms and conditions, each in an authorized denomination in aggregate
principal amount equal to and in exchange for the unrepurchased portion of the
principal of the Security so surrendered.
(6) Any issuance of shares of Common Stock in respect of the Repurchase
Price shall be deemed to have been effected immediately prior to the close of
business on the Repurchase Date and the Person or Persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such repurchase shall be deemed to have become on the Repurchase Date the
holder or holders of record of the shares represented thereby; provided,
however, that any surrender for repurchase on a date when the stock transfer
books of the Company shall be closed shall constitute the Person or Persons in
whose name or names the certificate or certificates for such shares are to be
issued as the record holder or holders thereof for all purposes at the opening
of business on the next succeeding day on which such stock transfer books are
open. No payment or adjustment shall be made for dividends or distributions on
any Common Stock issued upon repurchase of any Security declared prior to the
Repurchase Date.
(7) No fractions of shares shall be issued upon repurchase of Securities.
If more than one Security shall be repurchased from the same Holder and the
Repurchase Price shall be payable in
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shares of Common Stock, the number of full shares which shall be issuable upon
such repurchase shall be computed on the basis of the aggregate principal amount
of the Securities so repurchased. Instead of any fractional share of Common
Stock which would otherwise be issuable on the repurchase of any Security or
Securities, the Company will deliver to the applicable Holder its check for the
current market value of such fractional share. The current market value of a
fraction of a share is determined by multiplying the current market price of a
full share by the fraction, and rounding the result to the nearest cent. For
purposes of this Section, the current market price of a share of Common Stock is
the Closing Price Per Share of the Common Stock on the Trading Day immediately
preceding the Repurchase Date.
(8) Any issuance and delivery of certificates for shares of Common Stock
on repurchase of Securities shall be made without charge to the Holder of
Securities being repurchased for such certificates or for any tax or duty in
respect of the issuance or delivery of such certificates or the securities
represented thereby; provided, however, that the Company shall not be required
to pay any tax or duty which may be payable in respect of (i) income of the
Holder or (ii) any transfer involved in the issuance or delivery of certificates
for shares of Common Stock in a name other than that of the Holder of the
Securities being repurchased, and no such issuance or delivery shall be made
unless and until the Person requesting such issuance or delivery has paid to the
Company the amount of any such tax or duty or has established, to the
satisfaction of the Company, that such tax or duty has been paid.
(9) If shares of Common Stock to be delivered upon repurchase of a
Security are to be registered in a name other than that of the beneficial owner
of such Security, then such Holder must deliver to the Trustee a Surrender
Certificate, dated the date of surrender of such Restricted Security and signed
by such beneficial owner, as to compliance with the restrictions on transfer
applicable to such Restricted Security. Neither the Trustee nor any Registrar or
Transfer Agent or other agents shall be required to register in a name other
than that of the beneficial owner shares of Common Stock issued upon repurchase
of any such Restricted Security not so accompanied by a properly completed
Surrender Certificate.
(10) All Securities delivered for repurchase shall be delivered to the
Trustee to be canceled at the direction of the Trustee, which shall dispose of
the same as provided in Section 3.9.
SECTION 14.4 Certain Definitions.
-------------------
For purposes of this Article XIV,
(1) the term "beneficial owner" shall be determined in accordance with Rule
13d-3, as in effect on the date of the original execution of this Indenture,
promulgated by the Commission pursuant to the Exchange Act;
(2) a "Change in Control" shall be deemed to have occurred at the time,
after the original issuance of the Securities, of:
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(i) the acquisition by any Person (including any syndicate or group
deemed to be a "person" under Section 13(d)(3) of the Exchange Act) of
beneficial ownership, directly or indirectly, through a purchase, merger or
other acquisition transaction or series of transactions, of shares of capital
stock of the Company entitling such person to exercise 50% or more of the total
voting power of all shares of capital stock of the Company entitled to vote
generally in the elections of directors, other than (A) any such acquisition by
the Company, any subsidiary of the Company or any employee benefit plan of the
Company or (b) any such acquisition by Warburg, Pincus Ventures, L.P. or any
person controlled by or under common control with Warburg, Pincus Ventures,
L.P., so long as any such acquisition does not result, directly or indirectly,
in a "going private transaction" within the meaning of the Exchange Act; or
(ii) any consolidation of the Company with, or merger of the Company
into, any other Person, any merger of another Person into the Company, or any
conveyance, sale, transfer or lease of all or substantially all of the assets of
the Company to another Person (other than (a) any such transaction (x) which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of capital stock of the Company and (y) pursuant to which the
holders of the Common Stock immediately prior to such transaction have the
entitlement to exercise, directly or indirectly, 50% or more of the total voting
power of all shares of capital stock entitled to vote generally in the election
of directors of the continuing or surviving corporation immediately after such
transaction and (b) any merger which is effected solely to change the
jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock into solely shares
of common stock); provided, however, that a Change in Control shall not be
deemed to have occurred if the Closing Sales Price Per Share of the Common Stock
for any five Trading Days within the period of 10 consecutive Trading Days
ending immediately after the later of the Change in Control or the public
announcement of the Change in Control (in the case of a Change in Control under
clause (i) above) or the period of 10 consecutive Trading Days ending
immediately before the Change in Control (in the case of a Change in Control
under clause (ii) above) shall equal or exceed 105% of the Conversion Price of
the Securities in effect on each such Trading Day.
(3) the term "Conversion Price" shall equal U.S.$1,000 divided by the
Conversion Rate (rounded to the nearest cent); and
(4) for purposes of Section 14.4(2)(i), the term "person" shall include
any syndicate or group which would be deemed to be a "person" under Section
13(d)(3) of the Exchange Act, as in effect on the date of the original execution
of this Indenture.
SECTION 14.5 Consolidation, Merger, etc.
--------------------------
In the case of any merger, consolidation, conveyance, sale, transfer or
lease of all or substantially all of the assets of the Company to which Section
12.11 applies, in which the Common Stock of the Company is changed or exchanged
as a result into the right to receive shares of stock and other securities or
property or assets (including cash) which includes shares of Common Stock of the
Company or common stock of another Person that are, or upon issuance will be,
traded on a
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United States national securities exchange or approved for trading on an
established automated over-the-counter trading market in the United States and
such shares constitute at the time such change or exchange becomes effective in
excess of 50% of the aggregate fair market value of such shares of stock and
other securities, property and assets (including cash) (as determined by the
Company, which determination shall be conclusive and binding), then the Person
formed by such consolidation or resulting from such merger or combination or
which acquires the properties or assets (including cash) of the Company, as the
case may be, shall execute and deliver to the Trustee a supplemental indenture
(which shall comply with the Trust Indenture Act as in force at the date of
execution of such supplemental indenture) modifying the provisions of this
Indenture relating to the right of Holders to cause the Company to repurchase
the Securities following a Change in Control, including without limitation the
applicable provisions of this Article XIV and the definitions of the Common
Stock and Change in Control, as appropriate, and such other related definitions
set forth herein as determined in good faith by the Company (which determination
shall be conclusive and binding), to make such provisions apply in the event of
a subsequent Change in Control to the common stock and the issuer thereof if
different from the Company and Common Stock of the Company (in lieu of the
Company and the Common Stock of the Company).
ARTICLE XV
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY; NON-RECOURSE
SECTION 15.1 Company to Furnish Trustee Names and Addresses of Holders.
---------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee:
(1) semi-annually, not more than 15 days after the Regular Record Date, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders of Securities as of such Regular Record Date, and
(2) at such other times as the Trustee may reasonably request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished;
provided, however, that no such list need be furnished so long as the Trustee is
acting as Security Registrar.
SECTION 15.2 Preservation of Information.
---------------------------
(1) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 15.1 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list, if any, furnished to it as provided
in Section 15.1 upon receipt of a new list so furnished.
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(2) After this Indenture has been qualified under the Trust Indenture Act,
the rights of Holders to communicate with other Holders with respect to their
rights under this Indenture or under the Securities, and the corresponding
rights ,and duties of the Trustee, shall be as provided by the Trust Indenture
Act.
(3) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 15.3 Reserved.
--------
SECTION 15.4 Reports by Trustee.
------------------
(1) After this Indenture has been qualified under the Trust Indenture Act,
the Trustee shall transmit to Holders such reports concerning the Trustee and
its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
(2) After this Indenture has been qualified under the Trust Indenture Act,
a copy of each such report shall, at the time of such transmission to Holders,
be filed by the Trustee with each stock exchange upon which the Securities are
listed, with the Commission and with the Company. The Company will notify the
Trustee when the Securities are listed on any stock exchange.
SECTION 15.5 Reports by Company.
------------------
After this Indenture has been qualified under the Trust Indenture Act, the
Company shall file with the Trustee and the Commission, and transmit to Holders,
such information, documents and other reports, and such summaries thereof, as
may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be filed with
the Trustee within 15 days after the same is so required to be filed with the
Commission.
ARTICLE XVI
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 16.1 Indenture and Securities Solely Corporate Obligations.
-----------------------------------------------------
No recourse for the payment of the principal of or premium, if any, or
interest on any Security and no recourse under or upon any obligation, covenant
or agreement of the Company in this Indenture or in any supplemental indenture
or in any Security, or because of the creation of any
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indebtedness represented thereby, shall be had against any incorporator,
stockholder, employee, agent, officer, or director or subsidiary, as such, past,
present or future, of the Company or of any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the
Securities.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed all as of the day and year first above written.
BEA SYSTEMS, INC.
By: /s/ steve l. Brown
-----------------------------
Name: Steve l. Brown
Title: Executive Vice President
Chief Financial Officer
and Secretary
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:_____________________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed all as of the day and year first above written.
BEA SYSTEMS, INC.
By:_____________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By: /s/ Mark Henson
----------------------------
Name: Mark Henson
Title: Assistant Vice President
<PAGE>
ANNEX A -- Form of Restricted Securities Certificate
RESTRICTED SECURITIES CERTIFICATE (For transfers pursuant to Section
3.5(2)(ii) and (iii) of the Indenture)
State Street Bank and Trust Company of California, N.A.
Library Tower
633 West 5th Street - 12th Floor
Los Angeles, CA 90071
Re: 4% CONVERTIBLE SUBORDINATED NOTES DUE JUNE 15, 2005 OF BEA SYSTEMS,
INC. (THE "SECURITIES")
Reference is made to the Indenture, dated as of June 1, 1998 (the
"Indenture"), from BEA Systems, Inc. (the "Company") to State Street Bank and
Trust Company of California, N.A., as Trustee. Terms used herein and defined in
the Indenture or Rule 144 under the U.S. Securities Act of 1933 (the "Securities
Act") are used herein as so defined.
This certificate relates to U.S. $________ principal amount of Securities,
which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No.____
CERTIFICATE No(s).______
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be transferred to a
person (the "Transferee") who will take delivery in the form of a Restricted
Security. In connection with such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, it is being effected in accordance with Rule
144A or Rule 144 under the Securities Act and all applicable securities laws of
the states of the United States and other jurisdictions. Accordingly, the Owner
hereby further certifies as:
<PAGE>
(1) RULE 144A TRANSFERS. If the transfer is being effected in accordance
with Rule 144A:
(A) the Specified Securities are being transferred to a person that
the Owner and any person acting on its behalf reasonably believe is a "qualified
institutional buyer" within the meaning of Rule 144A, acquiring for its own
account or for the account of a qualified institutional buyer; and
(B) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the Owner may be
relying on Rule 144A in connection with the transfer; and
(2) RULE 144 TRANSFERS. If the transfer is being effected pursuant to Rule
144:
(A) the transfer is occurring after a holding period of at least one
year (computed in accordance with paragraph (d) of Rule 144) has elapsed since
the date the Specified Securities were acquired from the Company or from an
affiliate (as such term is defined in Rule 144) of the Company, whichever is
later, and is being effected in accordance with the applicable amount, manner of
sale and notice requirements of paragraphs (e), (f) and (h) of Rule 144; or
(B) the transfer is occurring after a period of at least two years
has elapsed since the date the Specified Securities were acquired from the
Company or from an affiliate (as such term is defined in Rule 144) of the
Company, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers.
Dated:_______
Print the name of the Undersigned, as such term is defined in the second
paragraph of this certificate.)
By:________________________
Name:______________________
Title:_____________________
(If the Undersigned is a corporation, partnership or fiduciary, the title of the
person signing on behalf of the Undersigned must be stated.)
-2-
<PAGE>
ANNEX B -- Form of Unrestricted Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Restricted Securities Legend pursuant to Section 3.5(3))
State Street Bank and Trust Company of California, N.A.
Library Tower
633 West 5th Street - 12th Floor
Los Angeles, CA 90071
RE: 4% CONVERTIBLE SUBORDINATED NOTES DUE JUNE 15, 2005 OF BEA
SYSTEMS, INC. (THE "SECURITIES")
Reference is made to the Indenture, dated as of June 1, 1998 (the
"Indenture"), from BEA Systems, Inc. (the "Company") to State Street Bank and
Trust Company of California, N.A., as Trustee. Terms used herein and defined in
the Indenture or in Rule 144 under the U.S. Securities Act of 1933 (the
"Securities Act") are used herein as so defined.
This certificate relates to U.S.$_______________ principal amount
of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No.______________________
CERTIFICATE No(s)._____________
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be
exchanged for Securities bearing no Restricted Securities Legend pursuant to
Section 3.5(3) of the Indenture. In connection with such exchange, the Owner
hereby certifies that the exchange is occurring after a period of at least two
years has elapsed since the date the Specified Securities were acquired from the
Company or from an "affiliate" (as such term is defined in Rule 144) of the
Company, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the
<PAGE>
Company. The Owner also acknowledges that any future transfers of the Specified
Securities must comply with all applicable securities laws of the states of the
United States and other jurisdictions.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers.
Dated:__________
(Print the name of the Undersigned, as such term is defined in the second
paragraph of this certificate.)
By:________________________
Name:______________________
Title:_____________________
(If the Undersigned is a corporation, partnership or fiduciary, the title of the
person signing on behalf of the Undersigned must be stated.)
-2-
<PAGE>
ANNEX C -- Form of Surrender Certificate
In connection with the certification contemplated by Section 12.2
or 14.3(9) relating to compliance with certain restrictions relating to
transfers of Restricted Securities, such certification shall be provided
substantially in the form of the following certificate, with only such changes
thereto as shall be approved by the Company and Goldman, Sachs & Co.:
CERTIFICATE
BEA SYSTEMS, INC.
4% CONVERTIBLE NOTES DUE JUNE 15, 2005
This is to certify that as of the date hereof with respect to
U.S. $______ principal amount of the above-captioned securities surrendered on
the date hereof (the "Surrendered Securities") for registration of transfer, or
for conversion or repurchase where the securities issuable upon such conversion
or repurchase are to be registered in a name other than that of the undersigned
Holder (each such transaction being a "transfer"), the undersigned Holder (as
defined in the Indenture) certifies that the transfer of Surrendered Securities
associated with such transfer complies with the restrictive legend set forth on
the face of the Surrendered Securities for the reason checked below:
______ The transfer of the Surrendered Securities complies with Rule 144
under the United States Securities Act of 1933, as amended (the
"Securities Act"); or
______ The transfer of the Surrendered Securities complies with
Rule 144A under the Securities Act; or
______ The transfer of the Surrendered Securities has been made to an
institution that is an "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act in a
transaction exempt from the registration requirements of the
Securities Act.
[Name of Holder]
Dated:__________________
*To be dated the date of surrender
<PAGE>
Exhibit 4.4
BEA SYSTEMS, INC.
4% CONVERTIBLE SUBORDINATED NOTES DUE JUNE 15, 2005
No. R-1 $200,000,000
CUSIP NO. 073325AA0
BEA SYSTEMS, INC., a corporation duly organized and existing under the laws
of the State of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture referred to on the reverse hereof), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of Two Hundred Million United States Dollars (U.S.$200,000,000)
which principal amount may from time to time be increased or decreased to such
other principal amounts (which, taken together with the principal amounts of all
other Outstanding Securities, shall not exceed U.S.$250,000,000 in the aggregate
at any time) by adjustments made on the records of the Trustee hereinafter
referred to in accordance with the Indenture) on June 15, 2005 and to pay
interest thereon, from June 12, 1998, or from the most recent Interest Payment
Date (as defined below) to which interest has been paid or duly provided for,
semi-annually in arrears on June 15 and December 15 in each year (each, an
"Interest Payment Date"), commencing December 15, 1998, at the rate of 4% per
annum, until the principal hereof is due, and at the rate of 4% per annum on any
overdue principal and premium, if any, and, to the extent permitted by law, on
any overdue interest. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the June 1 or December 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Except as otherwise provided in the Indenture, any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Company, notice whereof shall be given to Holders of
Securities not less than 10 days prior to the Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any automated quotation system or securities exchange on which the Securities
may be quoted or listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture. Payments of principal
shall be made upon the surrender of this Security at the option of the Holder
at the Corporate Trust Office of the Trustee, or at such other office or agency
of the Company as may be designated by it for such purpose in the Borough of
Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, or at such other offices or agencies as the Company
may designate, by United States Dollar check drawn on, or transfer to, a United
States Dollar account (such a transfer to be made only to a Holder of an
aggregate principal amount of Securities in excess of U.S.$2,000,000, and only
if such Holder shall have furnished wire instructions in writing to the
<PAGE>
Trustee no later than 15 days prior to the relevant payment date). Payment of
interest on this Security may be made by United States Dollar check drawn on a
bank in New York City mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register, or, upon written application
by the Holder to the Security Registrar setting forth wire instructions not
later than the relevant Record Date, by transfer to a United States Dollar
account (such a transfer to be made only to a Holder of an aggregate principal
amount of Securities in excess of U.S. $2,000,000 and only if such Holder shall
have furnished wire instructions in writing to the Trustee no later than 15 days
prior to the relevant payment date).
Except as specifically provided herein and in the Indenture, the Company
shall not be required to make any payment with respect to any tax, assessment or
other governmental charge imposed by any government or any political subdivision
or taxing authority thereof or therein.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof or an Authenticating Agent by the
manual signature of one of their respective authorized signatories, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed.
BEA SYSTEMS, INC.
By:
----------------------------------
Name: William T. Coleman III
Title: President, Chief Executive
Officer, and Chairman of the
Board of Directors
Attest:
By:
----------------------------------
Name: Steve L. Brown
Title: Executive Vice President,
Chief Financial Officer, and Secretary
Dated: June 12, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:
----------------------------------
Authorized Signatory
<PAGE>
REVERSE OF SECURITY
This Security is one of a duly authorized issue of securities of the
Company designated as its "4% Convertible Subordinated Notes due June 15, 2005"
(herein called the "Securities"), limited in aggregate principal amount to
U.S.$250,000,000, issued and to be issued under an Indenture, dated as of June
1, 1998 (herein called the "Indenture"), between the Company and State Street
Bank and Trust Company of California, N.A., as Trustee (herein called the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of Senior
Indebtedness and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of any
authorized denominations as requested by the Holder surrendering the same upon
surrender of the Security or Securities to be exchanged, at the Corporate Trust
Office of the Trustee. The Trustee upon such surrender by the Holder will issue
the new Securities in the requested denominations.
No sinking fund is provided for the Securities. The Securities will not be
subject to redemption prior to June 20, 2001 and will be redeemable on and after
that date at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days notice to the Holders prior to the Redemption Date at
the Redemption Prices (expressed as percentages of the principal amount) set
forth below; provided, however, that the Securities will not be redeemable
during the period beginning on June 20, 2001 and ending on June 17, 2003 unless
the Closing Price Per Share of the Common Stock exceeds 140% of the Conversion
Price for at least 20 Trading Days within a period of 30 consecutive Trading
Days ending within five Trading Days immediately preceding the aforesaid notice
to Holders.
The following table sets forth the Redemption Prices (expressed as
percentages of the principal amount) if such Security is redeemed during the 12-
month period beginning June 15 (June 20, 2001 through June 14, 2002 in the case
of the first such period and June 17, 2003 through June 14, 2004 in the case of
the third such period):
YEAR REDEMPTION PRICE
---- -----------------
2001 102.29%
2002 101.71
2003 101.14
2004 100.57
and thereafter at a Redemption Price equal to 100% of the principal amount,
together, in each case, with accrued interest to the Redemption Date; provided,
however, that interest installments on Securities whose Stated Maturity is on or
prior to such Redemption Date will be payable to the
<PAGE>
Holders of such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.
In the event of a redemption of the Securities, the Company will not be
required (a) to register the transfer or exchange of Securities for a period of
15 days immediately preceding the date notice is given identifying the serial
numbers of the Securities called for such redemption or (b) to register the
transfer or exchange of any Security, or portion thereof, called for redemption.
In any case where the due date for the payment of the principal of,
premium, if any, interest, or Liquidated Damages on any Security or the last day
on which a Holder of a Security has a right to convert his Security shall be, at
any Place of Payment or Place of Conversion as the case may be, a day on which
banking institutions at such Place of Payment or Place of Conversion are
authorized or obligated by law or executive order to close, then payment of
principal, premium, if any, interest, or Liquidated Damages, or delivery for
conversion of such Security need not be made on or by such date at such place
but may be made on or by the next succeeding day at such place which is not a
day on which banking institutions are authorized or obligated by law or
executive order to close, with the same force and effect as if made on the date
for such payment or the date fixed for redemption or repurchase, or by such last
day for conversion, and no interest shall accrue on the amount so payable for
the period after such date.
Subject to and upon compliance with the provisions of the Indenture, the
Holder of this Security is entitled, at his option, at any time on or after the
90th day following the initial issue date of the Securities and on or before the
close of business on the maturity date, or in case this Security or a portion
hereof is called for redemption or the Holder hereof has exercised his right to
require the Company to repurchase this Security or such portion hereof, then in
respect of this Security until and including, but (unless the Company defaults
in making the payment due upon redemption or repurchase, as the case may be) not
after, the close of business on the Redemption Date or the Repurchase Date, as
the case may be, to convert this Security (or any portion of the principal
amount hereof that is an integral multiple of U.S.$1,000, provided that the
unconverted portion of such principal amount is U.S.$1,000 or any integral
multiple of U.S.$1,000 in excess thereof) into fully paid and nonassessable
shares of Common Stock of the Company at an initial Conversion Rate of 37.8698
shares of Common Stock for each U.S.$1,000 principal amount of Securities (or at
the current adjusted Conversion Rate if an adjustment has been made as provided
in the Indenture) by surrender of this Security, duly endorsed or assigned to
the Company or in blank and, in case such surrender shall be made during the
period from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such Interest Payment Date
(except if this Security or portion thereof has been called for redemption on a
Redemption Date or is repurchasable on a Repurchase Date occurring, in either
case, during such period and, as a result, the right to convert would terminate
in such period), also accompanied by payment in New York Clearing House or other
funds acceptable to the Company of an amount equal to the interest payable on
such Interest Payment Date on the principal amount of this Security then being
converted, and also the conversion notice hereon duly executed, to the Company
at the Corporate Trust Office of the Trustee, or at such other office or agency
of the Company, subject to any laws or regulations
<PAGE>
applicable thereto and subject to the right of the Company to terminate the
appointment of any Conversion Agent (as defined below) as may be designated by
it for such purpose in the Borough of Manhattan, The City of New York, or at
such other offices or agencies as the Company may designate (each a "Conversion
Agent"), provided, further, that if this Security or portion hereof has been
called for redemption on a Redemption Date or is repurchasable on a Repurchase
Date occurring, in either case, during the period from the close of business on
any Regular Record Date next preceding any Interest Payment Date to the opening
of business on such succeeding Interest Payment Date and is surrendered for
conversion during such period, then the Holder of this Security on such Regular
Record Date will be entitled to receive the interest accruing hereon from the
Interest Payment Date next preceding the date of such conversion to such
succeeding Interest Payment Date and the Holder of this Security who converts
this Security or a portion hereof during such period shall not be required to
pay such interest upon surrender of this Security for conversion. Subject to the
provisions of the preceding sentence and, in the case of a conversion after the
close of business on the Regular Record Date next preceding any Interest Payment
Date and on or before the close of business on such Interest Payment Date, to
the right of the Holder of this Security (or any Predecessor Security of record
as of such Regular Record Date) to receive the related installment of interest
to the extent and under the circumstances provided in the Indenture, no cash
payment or adjustment is to be made on conversion for interest accrued hereon
from the Interest Payment Date next preceding the day of conversion, or for
dividends on the Common Stock issued on conversion hereof. The Company shall
thereafter deliver to the Holder the fixed number of shares of Common Stock
(together with any cash adjustment, as provided in the Indenture) into which
this Security is convertible and such delivery will be deemed to satisfy the
Company's obligation to pay the principal amount of this Security. No fractions
of shares or scrip representing fractions of shares will be issued on
conversion, but instead of any fractional interest (calculated to the nearest
1/100th of a share) the Company shall pay a cash adjustment as provided in the
Indenture. The Conversion Rate is subject to adjustment as provided in the
Indenture. In addition, the Indenture provides that in case of certain
consolidations or mergers to which the Company is a party (other than a
consolidation or merger that does not result in any reclassification,
conversion, exchange or cancellation of the Common Stock) or the conveyance,
transfer, sale or lease of all or substantially all of the property and assets
of the Company, the Indenture shall be amended, without the consent of any
Holders of Securities, so that this Security, if then Outstanding, will be
convertible thereafter, during the period this Security shall be convertible as
specified above, only into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, transfer, sale
or lease by a holder of the number of shares of Common Stock of the Company into
which this Security could have been converted immediately prior to such
consolidation, merger, conveyance, transfer, sale or lease (assuming such holder
of Common Stock is not a Constituent Person or an Affiliate of a Constituent
Person, failed to exercise any rights of election and received per share the
kind and amount received per share by a plurality of Non-electing Shares and
further assuming, if such consolidation, merger, conveyance, transfer, sale or
lease occurs prior to 90 days following the last original issue date of the
Securities, that the Security was convertible at the time of such occurrence at
the Conversion Rate specified above as adjusted from the issue date of such
Security to such time as provided in the Indenture). No adjustment in the
Conversion Rate will be made until such adjustment would require an increase or
decrease of at least one percent of such rate, provided that any adjustment that
would
<PAGE>
otherwise be made will be carried forward and taken into account in the
computation of any subsequent adjustment.
If this Security is a Registrable Security (as defined in this Indenture),
then the Holder of this Security (including any Person that has a beneficial
interest in this Security) and the Common Stock of the Company issuable upon
conversion hereof is entitled to the benefits of a Registration Rights
Agreement, dated as of June 1, 1998, executed by the Company (the "Registration
Rights Agreement"). Pursuant to the Registration Rights Agreement, the Company
has agreed for the benefit of the Holders from time to time of the Registrable
Securities that it will, at its expense, (a) within 90 days after the Issue Date
file a shelf registration statement (the "Shelf Registration Statement") with
the Commission with respect to resales of the Registrable Securities, (b) use
all reasonable efforts to cause such Shelf Registration Statement to be
declared effective by the Commission within 180 days after the Issue Date of the
Securities, provided, however that the Company may, upon written notice to all
the Holders, postpone having the Shelf Registration Statement declared effective
for a reasonable period not to exceed 90 days if the Company possesses material
non-public information, the disclosure of which would have a material adverse
effect on the Company and its subsidiaries taken as a whole, and (c) use all
reasonable efforts to maintain such Shelf Registration Statement effective under
the Securities Act of 1933, as amended, until the second annual anniversary of
the date it is declared effective or such earlier date as is provided in the
Registration Rights Agreement (the "Effectiveness Period"). The Company will be
permitted to suspend the use of the prospectus which is part of the Shelf
Registration Statement during certain periods of time as provided in the
Registration Rights Agreement.
If (i) on or prior to 90 days following the Issue Date, a Shelf
Registration Statement has not been filed with the Commission, or (ii) on or
prior to the 180th day following the Issue Date, such Shelf Registration
Statement is not declared effective (each, a "Registration Default"), additional
interest ("Liquidated Damages") will accrue on this Restricted Security from and
including the day following such Registration Default to but excluding the day
on which such Registration Default has been cured. Liquidated Damages will be
paid semi-annually in arrears, with the first semi-annual payment due on the
first Interest Payment Date, as applicable, in respect of the Restricted
Securities following the date on which such Liquidated Damages begin to accrue,
and will accrue at a rate per annum equal to an additional one-quarter of one
percent (0.25%) of the principal amount of the Restricted Securities to and
including the 90th day following such Registration Default and at a rate per
annum equal to one-half of one percent (0.50%) thereof from and after the 91st
day following such Registration Default. Pursuant to the Registration Rights
Agreement, in the event that the Shelf Registration Statement ceases to be
effective (or the Holders of Registrable Securities are otherwise prevented or
restricted by the Company from effecting sales pursuant thereto) (an "Effective
Failure") during the Effectiveness Period for more than 60 days, whether or not
consecutive, during any 12-month period, then the interest rate borne by the
Restricted Securities shall increase by an additional one-half of one percent
(0.50%) per annum from the 61st day of the applicable 12-month period until such
time as the Effective Failure is cured.
<PAGE>
Whenever in this Security there is a reference, in any context, to the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security, such mention shall be deemed to include mention of the payment of
Liquidated Damages payable as described in the preceding paragraph to the extent
that, in such context, Liquidated Damages are, were or would be payable in
respect of such Security and express mention of the payment of Liquidated
Damages (if applicable) in any provisions of this Security shall not be
construed as excluding Liquidated Damages in those provisions of this Security
where such express mention is not made.
If this Security is a Registrable Security and the Holder of this Security
(including any Person that has a beneficial interest in this Security) elects to
sell this Security pursuant to the Shelf Registration Statement then, by its
acceptance hereof, such Holder of this Security agrees to be bound by the terms
of the Registration Rights Agreement relating to the Registrable Securities
which are the subject of such election.
If a Change in Control occurs, the Holder of this Security, at the Holder's
option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion of
the principal amount hereof that is at least $5,000 or an integral multiple of
$1,000 in excess thereof, provided that the portion of the principal amount of
this Security to be Outstanding after such repurchase is at least equal to
U.S.$1,000) for cash at a Repurchase Price equal to 100% of the principal amount
thereof plus interest accrued to the Repurchase Date. At the option of the
Company, the Repurchase Price may be paid in cash or, subject to the conditions
provided in the Indenture, by delivery of shares of Common Stock having a fair
market value equal to the Repurchase Price. For purposes of this paragraph, the
fair market value of shares of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the Closing Prices Per Share for the
five consecutive Trading Days immediately preceding and including the third
Trading Day prior to the Repurchase Date. Whenever in this Security there is a
reference, in any context, to the principal of any Security as of any time, such
reference shall be deemed to include reference to the Repurchase Price payable
in respect of such Security to the extent that such Repurchase Price is, was or
would be so payable at such time, and express mention of the Repurchase Price in
any provision of this Security shall not be construed as excluding the
Repurchase Price so payable in those provisions of this Security when such
express mention is not made; provided, however, that, for the purposes of the
second succeeding paragraph, such reference shall be deemed to include reference
to the Repurchase Price only to the extent the Repurchase Price is payable in
cash.
In the event of a deposit or withdrawal of an interest in this Security,
including an exchange, transfer, redemption, repurchase or conversion of this
Security in part only, the Trustee, as custodian of the Depositary, shall make
an adjustment on its records to reflect such deposit or withdrawal in accordance
with the Applicable Procedures.
The indebtedness evidenced by this Security is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment
to the prior payment in full of all Senior Indebtedness of the Company, and this
Security is issued subject to such provisions of the Indenture
<PAGE>
with respect thereto. Each Holder of this Security, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be continuing, the principal of all
the Securities, together with accrued interest to the date of declaration, may
be declared due and payable in the manner and with the effect provided in the
Indenture. Upon payment (i) of the amount of principal so declared due and
payable, together with accrued interest to the date of declaration, and (ii) of
interest on any overdue principal and, to the extent permitted by applicable
law, overdue interest, all of the Company's obligations in respect of the
payment of the principal of and interest on the Securities shall terminate.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with either (a) the written consent of
the Holders of not less than a majority in principal amount of the Securities at
the time Outstanding, or (b) by the adoption of a resolution, at a meeting of
Holders of the Outstanding Securities at which a quorum is present, by the
Holders of at least 66-2/3% in aggregate principal amount of the Outstanding
Securities represented and entitled to vote at such meeting. The Indenture also
contains provisions permitting the Holders of specified percentages in principal
amount of the Securities at the time Outstanding, on behalf of the Holders of
all the Securities, to waive compliance by the Company with certain provisions
of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued in exchange therefore or in lieu hereof
whether or not notation of such consent or waiver is made upon this Security or
such other Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default, the Holders of not less
than 25% in principal amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default as Trustee and offered the Trustee reasonable indemnity and the
Trustee shall not have received from the Holders of a majority in principal
amount of the Securities Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement
of any payment of principal hereof, premiums if any, or interest (including
Liquidated Damages) hereon on or after the respective due dates expressed herein
or for the enforcement of the right to convert this Security as provided in the
Indenture.
<PAGE>
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest (including Liquidated Damages) on this Security at the times, places
and rate, and in the coin or currency, herein prescribed or to convert this
Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable on the Security Register
upon surrender of this Security for registration of transfer at the Corporate
Trust Office of the Trustee or at such other office or agency of the Company as
may be designated by it for such purpose in the Borough of Manhattan, The City
of New York (which shall initially be an office or agency of the Trustee), or at
such other offices or agencies as the Company may designate, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder thereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees by the Registrar. No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to recover any tax or
other governmental charge payable in connection therewith.
Prior to due presentation of a this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered, as the owner thereof for
all purposes, whether or not such Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse for the payment of the principal (and premium, if any) or
interest on this Security and no recourse under or upon any obligation, covenant
or agreement of the Company in the Indenture or any indenture supplemental
thereto or in any Security, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
employee, agent, officer or director or subsidiary, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of consideration for the issue hereof, expressly waived and released.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of
this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
TENCOM as tenant in common UNIF GIFT MIN ACT ____ Custodian _____
TEN ENT as tenants by the entireties (Cust) (Minor)
JT TEN as joint tenants with right of under Uniform Gifts
survivorship and not as tenants in to Minors Act ______
common (State)
Additional abbreviations may also be used though not in the above list.
<PAGE>
ELECTION OF HOLDER TO REQUIRE REPURCHASE
(1) Pursuant to Article 14.1 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Company.
(2) The undersigned hereby directs the Trustee or the Company to pay it or
______________ an amount in cash or, at the Company's election, Common Stock
valued as set forth in the Indenture, equal to 100% of the principal amount to
be repurchased (as set forth below), plus interest accrued to the Repurchase
Date, as provided in the Indenture.
Dated:
- ---------------------------------------------
- ---------------------------------------------
Signature(s)
Signature(s) must be guaranteed by an Eligible
Guarantor Institution with membership in an
approved signature guarantee program pursuant
to Rule 17Ad-15 under the Securities Exchange
Act of 1934.
- ---------------------------------------------
Signature Guaranteed
Principal amount to be repurchased (at least
U.S. $5,000 or an integral multiple of $1,000
in excess thereof): ___________________
Remaining principal amount following such
repurchase (not less than U.S. $1,000):
______________
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
<PAGE>
CONVERSION NOTICE
The undersigned Holder of this Security hereby irrevocably exercises the
option to convert this Security, or any portion of the principal amount hereof
(which is U.S.$1,000 or an integral multiple of U.S.$1,000 in excess thereof,
provided that the unconverted portion of such principal amount is U.S. $1,000 or
any integral multiple of U.S. $1,000 in excess thereof) below designated, into
shares of Common Stock in accordance with the terms of the Indenture referred to
in this Security, and directs that such shares, together with a check in payment
for any fractional share and any Securities representing any unconverted
principal amount hereof, be delivered to and be registered in the name of the
undersigned unless a different name has been indicated below. If shares of
Common Stock or Securities are to be registered in the name of a Person other
than the undersigned, (a) the undersigned will pay all transfer taxes payable
with respect thereto and (b) signature(s) must be guaranteed by an Eligible
Guarantor Institution with membership in an approved signature guarantee program
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. Any amount
required to be paid by the undersigned on account of interest accompanies this
Security.
Dated:
----------------- -----------------------------------
-----------------------------------
Signature(s)
If shares or Securities are to be registered
in the name of a Person other than the Holder,
please print such Person's name and address:
- ------------------------------------------
(Name)
- ------------------------------------------
- ------------------------------------------
(Address)
- ------------------------------------------
Social Security or other Identification
Number, if any
- ------------------------------------------
Signature Guaranteed
<PAGE>
If only a portion of the Securities is to be converted, please indicate:
1. Principal amount to be converted: U.S. $ ___________
2. Principal amount and denomination of Securities
representing unconverted principal amount to be issued:
Amount: U.S. $___________ Denominations: U.S. $____________
(U.S.$1,000 or any integral multiple of U.S.$1,000 in excess thereof, provided
that the unconverted portion of such principal amount is U.S. $1,000 or any
integral multiple of U.S. $1,000 in excess thereof)
<PAGE>
ASSIGNMENT
For value received___________hereby sell(s), assign(s) and transfer(s) unto
________________ (Please insert social security or other identifying number of
assignee) the within Security, and hereby irrevocably constitutes and appoints
_______________ as attorney to transfer the said Security on the books of the
Company, with full power of substitution in the premises.
Dated:
-----------------
--------------------------------
--------------------------------
Signature(s)
Signature(s) must be guaranteed by
an Eligible Guarantor Institution
with membership in an approved
signature guarantee program
pursuant to Rule 17Ad - 15 under
the Securities Exchange Act of
1934.
--------------------------------
Signature Guaranteed
<PAGE>
THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY THAT IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THIS SECURITY AND ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (I) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) TO AN INSTITUTION
THAT IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, (III) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, AND IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTION OF THE UNITED
STATES.
THIS SECURITY, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND
ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO
MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS SECURITY AND ANY
SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE
INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF
RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY AND ANY SUCH
SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY AND ANY SUCH SHARES TO
HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A
NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND
ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE
INDENTURE, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.
<PAGE>
Exhibit 4.5
BEA SYSTEMS, INC.
4% CONVERTIBLE SUBORDINATED NOTES DUE 2005
_____________
PURCHASE AGREEMENT
------------------
June 8, 1998
Goldman, Sachs & Co.,
BancAmerica Robertson Stephens
BT Alex. Brown Incorporated
Deutsche Bank Securities Inc.
SoundView Financial Group, Inc.
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
BEA Systems, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$200,000,000 principal amount of the 4% Convertible Subordinated Notes due June
15, 2005, convertible into Common Stock, $0.001 par value per share ("Stock"),
of the Company, specified above (the "Firm Securities") and, at the election of
the Purchasers, up to an aggregate of $50,000,000 additional aggregate principal
amount (the "Optional Securities") (the Firm Securities and the Optional
Securities which the Underwriters elect to purchase pursuant to Section 2 hereof
are herein collectively called the "Securities").
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) A preliminary offering circular, dated May 30, 1998 (the
"Preliminary Offering Circular") and an offering circular, dated June 8,
1998 (the "Offering Circular"), and the Company's Annual Report on Form 10-
K for the fiscal year ended January 31, 1998, which is attached to and made
a part of the Preliminary Offering Circular and the Offering Circular, have
been prepared in connection with the offering of the Securities and shares
of the Stock issuable upon conversion thereof. Any reference to the
Preliminary Offering Circular or the Offering Circular shall be deemed to
refer to and include the Company's most recent Annual Report on Form 10-K
and all subsequent documents filed with the United States Securities and
Exchange Commission (the "Commission") pursuant to Section 13(a), 13(c) or
15(d) of the United States Securities Exchange Act of 1934, as amended (the
"Exchange Act") on or prior to the date of the Preliminary Offering
Circular or the Offering Circular, as the case may be, and any reference to
<PAGE>
the Preliminary Offering Circular or the Offering Circular, as the case may
be, as amended or supplemented, as of any specified date, shall be deemed
to include (i) any documents filed with the Commission pursuant to Section
13(a), 13(c) or 15(d) of the Exchange Act after the date of the Preliminary
Offering Circular or the Offering Circular, as the case may be, and prior
to such specified date and (ii) any Additional Issuer Information (as
defined in Section 5(f)) furnished by the Company prior to the completion
of the distribution of the Securities and all documents filed under the
Exchange Act and so deemed to be included in the Preliminary Offering
Circular or the Offering Circular, as the case may be, or any amendment or
supplement thereto are hereinafter called the "Exchange Act Reports". The
Exchange Act Reports, when they were or are filed with the Commission,
conformed or will conform in all material respects to the applicable
requirements of the Exchange Act and the applicable rules and regulations
of the Commission thereunder. The Preliminary Offering Circular or the
Offering Circular and any amendments or supplements thereto and the
Exchange Act Reports did not and will not, as of their respective dates,
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a Purchaser through
Goldman, Sachs & Co. expressly for use therein;
(b) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in the
Offering Circular any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Offering
Circular; and, since the respective dates as of which information is given
in the Offering Circular, there has not been any change in the capital
stock (except for stock options issued in the ordinary course of business,
Stock issued upon exercise of stock options or Stock issued under the
Company's employee stock purchase plan since the date of the Offering
Circular pursuant to stock option or incentive plans in effect on the date
of the Offering Circular) or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Offering Circular;
(c) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Offering
Circular or such as do not materially affect the value of such property and
do not interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries; and any real property and buildings
held under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries;
(d) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and
2
<PAGE>
other) to own its properties and conduct its business as described in the
Offering Circular, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no material
liability or disability by reason of the failure to be so qualified in any
such jurisdiction; and each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation;
(e) The Company has an authorized capitalization as set forth in the
Offering Circular, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable; the shares of Stock initially issuable upon conversion
of the Securities have been duly and validly authorized and reserved for
issuance and, when issued and delivered in accordance with the provisions
of the Securities and the Indenture referred to below, will be duly and
validly issued, fully paid and non-assessable and will conform to the
description of the Stock contained in the Offering Circular; and all of the
issued shares of capital stock of each subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and non-assessable
and (except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims;
(f) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Company entitled to the benefits provided by the
indenture to be dated as of June 1, 1998 (the "Indenture") between the
Company and State Street Bank and Trust Company of California, N.A., as
Trustee (the "Trustee"), under which they are to be issued, which will be
substantially in the form previously delivered to you; the Indenture has
been duly authorized and, when executed and delivered by the Company and
the Trustee, the Indenture will constitute a valid and legally binding
instrument, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; and the Securities and the Indenture will
conform to the descriptions thereof in the Offering Circular and will be in
substantially the form previously delivered to you;
(g) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations G, T, U, and X of the Board of Governors of the
Federal Reserve System;
(h) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company
in connection with the offering of the Securities;
(i) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture and
this Agreement and the consummation of
3
<PAGE>
the transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action result
in any violation of the provisions of the Certificate of Incorporation or
By-laws of the Company or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
issue and sale of the Securities or the consummation by the Company of the
transactions contemplated by this Agreement or the Indenture, except the
filing of a notice on Form D by the Company with the Commission pursuant to
Section 5(h) hereof and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the
Securities by the Purchasers;
(j) Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation or By-laws or in default in the
performance or observance of any material obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound;
(k) The statements set forth in the Offering Circular under the
caption "Description of Notes" and "Description of Capital Stock", insofar
as they purport to constitute a summary of the terms of the Securities and
the Stock, under the caption "Certain United States Federal Income Tax
Consequences" and under the caption "Underwriting," insofar as they purport
to describe the provisions of documents referred to therein, are accurate,
complete and fair;
(l) Other than as set forth in the Offering Circular, there are no
legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or future financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(m) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the meaning
of Rule 144A under the Securities Act of 1933, as amended (the "Act"), as
securities which are listed on a national securities exchange registered
under Section 6 of the Exchange Act or quoted in a U.S. automated inter-
dealer quotation system;
(n) The Company is subject to Section 13 or 15(d) of the Exchange
Act;
4
<PAGE>
(o) The Company is not, and after giving effect to the offering and
sale of the Securities, will not be an "investment company", or an entity
"controlled" by an "investment company", as such terms are defined in the
United States Investment Company Act of 1940, as amended (the "Investment
Company Act");
(p) Neither the Company, nor any person acting on its or their behalf
has offered or sold the Securities by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under the Act;
(q) Within the preceding six months, neither the Company nor any
other person acting on behalf of the Company has offered or sold to any
person any Securities, or any securities of the same or a similar class as
the Securities, other than Securities offered or sold to the Purchasers
hereunder. The Company will take reasonable precautions designed to insure
that any offer or sale, direct or indirect, in the United States or to any
U.S. person (as defined in Rule 902 under the Act) of any Securities or any
substantially similar security issued by the Company, within six months
subsequent to the date on which the distribution of the Securities has been
completed (as notified to the Company by Goldman, Sachs & Co.), is made
under restrictions and other circumstances reasonably designed not to
affect the status of the offer and sale of the Securities in the United
States and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of the Act;
(r) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes; and
(s) Ernst & Young LLP, who have certified certain financial
statements of the Company and its subsidiaries, and Ernst & Young Audit,
who have certified certain financial statements of USL Finance S.A., are
each independent public accountants as required by the Act and the rules
and regulations of the Commission thereunder.
(t) Except as disclosed in the Offering Circular, the Company is not
subject to any agreements or arrangements which restrict the Company's
ability to engage in business with or to compete with any entity or any
type of business;
(u) Except as disclosed in the Offering Circular, each of the Company
and its subsidiaries owns or possesses adequate licenses or other rights to
use all patents, patent licenses, trademarks, trade names, service marks,
service names, copyrights and other intellectual property rights
("Intellectual Property") necessary to carry on its business as presently
conducted; and neither the Company nor any of its subsidiaries has received
any notice of infringement or conflict with asserted rights of others with
respect to the Intellectual Property which, singly or in the aggregate, if
the subject of any unfavorable decision, ruling or finding, would result in
a material adverse effect on the business, financial condition or results
of operations of the Company and its subsidiaries, taken as a whole;
(v) The Company and its subsidiaries have obtained any permits,
consents and authorizations required to be obtained by them under
applicable federal, state, local and foreign
5
<PAGE>
laws or regulations in order to conduct their business as described in the
Offering Circular, including, but not limited to, those under laws or
regulations relating to the protection of the environment or concerning the
handling, storage, disposal or discharge of toxic materials (collectively,
"Environmental Laws"), and any such permits, consents and authorizations
remain in full force and effect. The Company and its subsidiaries are in
compliance with the Environ mental Laws in all material respects, and there
is no pending or, to the Company's knowledge, threatened, action or
proceeding against the Company or any of its subsidiaries alleging
violations of the Environmental Laws; and
(w) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (a)
transactions are executed in accordance with management's general or
specific authorizations; (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (c)
access to assets is permitted only in accordance with management's general
or specific authorization; and (d) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(x) The Asset Purchase Agreement dated May 19, 1998 by and between
NCR Corporation, a Maryland corporation ("NCR"), and the Company (the "Top
End Acquisition Agreement"), has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of
the Company, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; the Top End Acquisition Agreement is in full
force and effect and the Company has no knowledge that any of the
conditions to closing set forth in Sections 3.2 and 3.3 of the Top End
Acquisition Agreement have become incapable of fulfillment (other than
those that have been waived by the other party) or that there is currently
any basis for termination by the Company or NCR pursuant to Section 13.1 of
the Top End Acquisition Agreement; and the statements in the Offering
Circular under the caption "SUMMARY--Recent Events--Pending Acquisition of
TOP END" and in the second paragraph under the caption "RISK FACTORS--Past
and Future Acquisitions; Risks Associated with Pending Acquisition" are
true and accurate in all respects.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Purchasers, and each of the
Purchasers agrees, severally and not jointly, to purchase from the Company,
at a purchase price of 97.375% of the principal amount thereof, plus
accrued interest, if any, from June 12, 1998 to the Time of Delivery
hereunder, the principal amount of Securities set forth opposite the name
of such Purchaser in Schedule I hereto, and (b) in the event and to the
extent that the Purchasers shall exercise the election to purchase Optional
Securities as provided below, the Company agrees to issue and sell to each
of the Purchasers, and each of the Purchasers agrees, severally and not
jointly, to purchase from the Company, at the same purchase price set forth
in clause (a) of this Section 2, that portion of the aggregate principal
amount of the Optional Securities as to which such election shall have been
exercised (to be adjusted by you so as to eliminate fractions), determined
by multiplying such aggregate principal amount of Optional Securities by a
fraction, the numerator of which is the maximum aggregate principal amount
of Optional Securities which such Purchaser is entitled to purchase as set
forth opposite the name of such Purchaser in Schedule I hereto and the
denominator of
6
<PAGE>
which is the maximum aggregate principal amount of Optional Securities
which all of the Purchasers are entitled to purchase hereunder.
The Company hereby grants to the Purchasers the right to purchase at
their election up to $50,000,000 aggregate principal amount of Optional
Securities, at the purchase price set forth in clause (a) of the first
paragraph of this Section 2, for the sole purpose of covering
overallotments in the sale of Firm Securities. Any such election to
purchase Optional Securities may be exercised by written notice from you to
the Company, given within a period of 30 calendar days after the date of
this Agreement, setting forth the aggregate principal amount of Optional
Securities to be purchased and the date on which such Optional Securities
are to be delivered, as determined by you but in no event earlier than the
First Time of Delivery (as defined in Section 4 hereof) or, unless you and
the Company otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice.
3. Upon the authorization by you of the release of the Securities, the
several Purchasers propose to offer the Securities for sale upon the terms
and conditions set forth in this Agreement and the Offering Circular and
each Purchaser hereby represents and warrants to, and agrees with the
Company that:
(a) It will offer and sell the Securities only to persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within
the meaning of Rule 144A under the Act in transactions meeting the
requirements of Rule 144A;
(b) It is an Institutional Accredited Investor; and
(c) It will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to the
methods described in Rule 502(c) under the Act.
4. (a) The Securities to be purchased by each Purchaser hereunder will be
represented by one or more definitive global Securities in book-entry form
which will be deposited by or on behalf of the Company with The Depository
Trust Company ("DTC") or its designated custodian. The Company will deliver
the Securities to Goldman, Sachs & Co., for the account of each Purchaser,
against payment by or on behalf of such Purchaser of the purchase price
therefor by wire transfer, payable to the order of the Company in Federal
(same day) funds, by causing DTC to credit the Securities to the account of
Goldman, Sachs & Co. at DTC. The Company will cause the certificates
representing the Securities to be made available to Goldman, Sachs & Co.
for checking at least twenty-four hours prior to the Time of Delivery (as
defined below) at the office of DTC or its designated custodian (the
"Designated Office"). The time and date of such delivery and payment shall
be, with respect to the Firm Securities, 9:30 a.m., New York City time, on
June 12, 1998 or such other time and date as Goldman, Sachs & Co. and the
Company may agree upon in writing, and, with respect to the Optional
Securities, 9:30 a.m., New York City time, on the date specified by
Goldman, Sachs & Co. in the written notice given by Goldman, Sachs & Co. of
the Purchasers' election to purchase such Optional Securities, or such
other time and date as Goldman, Sachs & Co. and the Company may agree upon
in writing. Such time and date for delivery of the Firm Securities is
herein called the "First Time of Delivery", such time and date for delivery
of the Optional Securities, if not the First Time of Delivery, is herein
called the "Second
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Time of Delivery", and each such time and date for delivery is herein
called a "Time of Delivery". Such time and date are herein called the "Time
of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Securities and any additional documents requested by
the Purchasers pursuant to Section 7 hereof, will be delivered at such time
and date at the offices of Morrison & Foerster LLP, 755 Page Mill Road,
Palo Alto, California 94304 (the "Closing Location"), and the Securities
will be delivered at the Designated Office, all at the Time of Delivery. A
meeting will be held at the Closing Location at 3:00 p.m., New York City
time, on the New York Business Day next preceding the Time of Delivery, at
which meeting the final drafts of the documents to be delivered pursuant to
the preceding sentence will be available for review by the parties hereto.
For the purposes of this Section 4, "New York Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by
law or executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to
make no amendment or any supplement to the Offering Circular which shall be
reasonably disapproved by you promptly after reasonable notice thereof; and
to furnish you with copies thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities and the shares of Stock
issuable upon conversion of the Securities for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the Securities, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) To furnish the Purchasers with five (5) copies of the Offering
Circular and each amendment or supplement thereto signed by an authorized
officer of the Company with the independent accountants' report(s) in the
Offering Circular, and any amendment or supplement containing amendments to
the financial statements covered by such report(s), signed by the
accountants, and additional copies thereof in such quantities as you may
from time to time reasonably request, and if, at any time prior to the
expiration of nine months after the date of the Offering Circular, any
event shall have occurred as a result of which the Offering Circular as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made when such Offering Circular is delivered, not misleading, or, if
for any other reason it shall be necessary or desirable during such same
period to amend or supplement the Offering Circular, to notify you and upon
your request to prepare and furnish without charge to each Purchaser and to
any dealer in securities as many copies as you may from time to time
reasonably request of an amended Offering Circular or a supplement to the
Offering Circular which will correct such statement or omission or effect
such compliance;
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(d) During the period beginning from the date hereof and continuing
until the date six months after the Time of Delivery, not to offer, sell
contract to sell or otherwise dispose of, except as provided hereunder any
securities of the Company that are substantially similar to the Securities
or the Stock, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to
receive, Stock or any such substantially similar securities (other than
pursuant to employee stock option plans or employee stock purchase plans
existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement),
without your prior written consent; provided, however, that the Company may
issue up to 3,000,000 shares of Common Stock as consideration for
acquisitions of businesses occurring after the date of the Offering
Circular, provided that each recipient of any such shares agrees in writing
for the benefit of the Purchasers that all such shares shall remain subject
to restrictions identical to those contained in this paragraph.
(e) Not to be or become, at any time prior to the expiration of three
years after the Time of Delivery, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act, for the benefit of holders from time to time of
Securities, to furnish at its expense, upon request, to holders of
Securities and prospective purchasers of securities information (the
"Additional Issuer Information") satisfying the requirements of subsection
(d)(4)(i) of Rule 144A under the Act;
(g) If requested by you, to use its best efforts to cause such
Designated Securities to be eligible for the PORTAL trading system of the
National Association of Securities Dealers, Inc.;
(h) To file with the Commission, not later than 15 days after the
Time of Delivery, five copies of a notice on Form D under the Act (one of
which will be manually signed by a person duly authorized by the Company);
to otherwise comply with the requirements of Rule 503 under the Act; and to
furnish promptly to you evidence of each such required timely filing
(including a copy thereof);
(i) To furnish to the holders of the Securities as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and cash flows
of the Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each of
the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the date of the Offering Circular), consolidated
summary financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(j) During a period of five years from the date of the Offering
Circular, to furnish to you copies of all reports or other communications
(financial or other) furnished to stockholders of the Company, and to
deliver to you (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any
securities exchange on which the Securities or any class of securities of
the Company is listed; and (ii) such additional
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<PAGE>
information concerning the business and financial condition of the Company
as you may from time to time reasonably request (such financial statements
to be on a consolidated basis to the extent the accounts of the Company and
its subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission);
(k) During the period of two years after the Time of Delivery (or
such shorter period following the Time of Delivery after which resales of
the Securities may be affected by non-affiliates of the Company in reliance
on paragraph (k) of Rule 144 under the Act, or any successor provision
thereto), the Company will not, and will use reasonable efforts to ensure
that its "affiliates" (as defined in Rule 144 under the Act) do not, resell
any of the Securities which constitute "restricted securities" under Rule
144 that have been reacquired by any of them other than pursuant to an
effective registration statement or an exemption from the registration
requirements under the Act that results in the Securities no longer
constituting restricted securities;
(l) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the
Offering Circular under the caption "Use of Proceeds";
(m) To reserve and keep available at all times, free of preemptive
rights, shares of Stock for the purpose of enabling the Company to satisfy
any obligations to issue shares of its Stock upon conversion of the
Securities; and
(n) To use its best efforts to list, subject to notice of issuance,
the shares of Stock issuable upon conversion of the Securities on the
Nasdaq National Market.
6. The Company covenants and agrees with the several Purchasers that the
Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the issue of the Securities and the shares of Stock
issuable upon conversion of the Securities and all other expenses in
connection with the preparation, printing and filing of the Preliminary
Offering Circular and the Offering Circular and any amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Purchasers and dealers; (ii) the cost of printing or producing any
Agreement among Purchasers, this Agreement, the Indenture, the Blue Sky and
Legal Investment Memoranda, closing documents (including any compilations
thereof) and any other documents in connection with the offering, purchase,
sale and delivery of the Securities; (iii) any expenses in connection with
the qualification of the Securities and the shares of Stock issuable upon
conversion of the Securities for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Purchasers in connection with such
qualification and in connection with the Blue Sky and legal investment
surveys; (iv) any fees charged by securities rating services for rating the
Securities; (v) the cost of preparing the Securities; (vi) the fees and
expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in connection with the Indenture
and the Securities; (vii) any cost incurred in connection with the
designation of the Securities for trading in PORTAL and the listing of the
shares of Stock issuable upon conversion of the Securities and (viii) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this
Section,
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and Sections 8 and 11 hereof, the Purchasers will pay all of their own
costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Securities by them, and any advertising expenses
connected with any offers they may make.
7. The obligations of the Purchasers hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and
other statements of the Company herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and
the following additional conditions:
(a) Wilson Sonsini Goodrich & Rosati, P.C., counsel for the
Purchasers, shall have furnished to you such opinion or opinions, dated
such Time of Delivery, with respect to the matters covered in paragraphs
(i), (ii), (vii), (viii), (ix), (xiii), (xv) and (xvi) of subsection (b)
below as well as such other related matters as you may reasonably request,
and such counsel shall have received such papers and information as they
may reasonably request to enable them to pass upon such matters;
(b) Morrison & Foerster LLP, counsel for the Company, shall have
furnished to you their written opinion, dated such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering Circular;
(ii) The Company has an authorized capitalization as set forth
in the Offering Circular, and all of the issued shares of capital stock of
the Company have been duly and validly authorized and issued and are fully
paid and non-assessable; and the shares of Stock initially issuable upon
conversion of the Securities have been duly and validly authorized and
reserved for issuance and, when issued and delivered in accordance with the
provisions of the Securities and the Indenture, will be duly and validly
issued and fully paid and non-assessable, and will conform to the
description of the Stock contained in the Offering Circular;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under
the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, or is subject
to no material liability or disability by reason of the failure to be so
qualified in any such jurisdiction (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the Company,
provided that such counsel shall state that they believe that both you and
they are justified in relying upon such opinions and certificates);
(iv) Each subsidiary of the Company that is a "Significant
Subsidiary" of the Company within the meaning of Regulation S-X under the
Act (each, a "Material Subsidiary") has been duly incorporated and is
validly existing as a corporation in good standing under the laws
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<PAGE>
of its jurisdiction of incorporation; and all of the issued shares of
capital stock of each such subsidiary have been duly and validly authorized
and issued, are fully paid and non-assessable, and (except for directors'
qualifying shares) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims (such counsel
being entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company or its subsidiaries, provided that
such counsel shall state that they believe that both you and they are
justified in relying upon such opinions and certificates);
(v) The Company and the Material Subsidiaries have good and
marketable title in fee simple to all real property owned by them, in each
case free and clear of all liens, encumbrances and defects except such as
are described in the Offering Circular or such as do not materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and the Material
Subsidiaries; and any real property and buildings held under lease by the
Company and the Material Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and the Material Subsidiaries (in
giving the opinion in this clause, such counsel may state that no
examination of record titles for the purpose of such opinion has been made,
and that they are relying upon a general review of the titles of the
Company and the Material Subsidiaries, upon opinions of local counsel and
abstracts, reports and policies of title companies rendered or issued at or
subsequent to the time of acquisition of such property by the Company or
the Material Subsidiaries, upon opinions of counsel to the lessors of such
property and, in respect of matters of fact, upon certificates of officers
of the Company or the Material Subsidiaries, provided that such counsel
shall state that they believe that both you and they are justified in
relying upon such opinions, abstracts, reports, policies and certificates,
and that copies of such opinions and certificates be provided to counsel
for the Purchasers.
(vi) To the best of such counsel's knowledge and other than as
set forth in the Offering Circular, there are no legal or governmental
proceedings pending to which the Company or any of the Material
Subsidiaries is a party or of which any property of the Company or any of
the Material Subsidiaries is the subject which, if determined adversely to
the Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; and, to the best of such
counsel's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(vii) This Agreement has been duly authorized, executed and
delivered by the Company;
(viii) The Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and legally
binding obligations of the Company entitled to the benefits provided by the
Indenture; and the Securities and the Indenture conform to the descriptions
thereof in the Offering Circular.
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(ix) The Indenture has been duly authorized, executed and
delivered by the parties thereto and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles;
(x) The issue and sale of the Securities being issued at such
Time of Delivery and the compliance by the Company with all of the
provisions of the Securities, the Indenture and this Agreement and the
consummation of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument known to such
counsel to which the Company or any of the Material Subsidiaries is a party
or by which the Company or any of the Material Subsidiaries is bound or to
which any of the property or assets of the Company or any of the Material
Subsidiaries is subject, nor will such actions result in any violation of
the provisions of the Certificate of Incorporation or By-laws of the
Company or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
the Material Subsidiaries or any of their properties;
(xi) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Securities being issued at such Time
of Delivery or the consummation by the Company of the transactions
contemplated by this Agreement or the Indenture, except such as may be
required under the Act in connection with the shares of Stock issuable upon
conversion of the Securities and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the
Securities by the Purchasers;
(xii) Neither the Company nor any of the Material Subsidiaries is
in violation of its Certificate of Incorporation or By-laws or in default
in the performance or observance of any material obligation, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument known to such counsel to
which it is a party or by which it or any of its properties may be bound;
(xiii) The statements set forth in the Offering Circular under the
caption "Description of Notes" and "Description of Capital Stock", insofar
as they purport to constitute a summary of the terms of the Securities and
the Stock, under the caption "Certain United States Federal Income Tax
Consequences" and under the caption "Underwriting", insofar as they purport
to describe the provisions of the laws and documents referred to therein,
are accurate, complete and fair;
(xiv) The Exchange Act Reports (other than the financial
statements and related schedules therein, as to which such counsel need
express no opinion), when they were filed with the Commission, complied as
to form in all material respects with the requirements of the Exchange Act,
and the rules and regulations of the Commission thereunder; and such
counsel has no reason to believe that any of such documents, when they were
so filed, contained an
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untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such documents were so filed,
not misleading;
(xv) No registration of the Securities under the Act, and no
qualification of an indenture under the United States Trust Indenture Act
of 1939 with respect thereto, is required for the offer, sale and initial
resale of the Securities by the Purchasers in the manner contemplated by
this Agreement;
(xvi) Such counsel have no reason to believe that the Offering
Circular and any further amendments or supplements thereto made by the
Company prior to the Time of Delivery (other than the financial statements
and related schedules therein, as to which such counsel need express no
opinion) contained as of its date or contains as of such Time of Delivery
an untrue statement of a material fact or omitted or omits, as the case may
be, to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(xvii) The Company is not an "investment company" or an entity
"controlled" by an "investment company"; as such terms are defined in the
Investment Company Act;
(xviii) To the best of such counsel's knowledge, neither the
Company nor any of its subsidiaries has received any notice of infringement
or conflict with asserted rights of others with respect to any patents,
patent licenses, trademarks, trade names, service marks, service names,
copyrights and other intellectual property rights owned or licensed by the
Company or any of its subsidiaries ("Intellectual Property") which, singly
or in the aggregate, if the subject of any unfavorable decision, ruling or
finding, would result in a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole; and, to the best of such counsel's
knowledge, there are no judicial proceedings pending relating to the
Intellectual Property to which the Company or any of its subsidiaries is a
party or of which any property of the Company or any of its subsidiaries is
subject, and, to the best of such counsel's knowledge, except as set forth
in the Offering Circular, no such judicial proceedings are threatened by
the governmental authorities or others; and
(xix) The Top End Acquisition Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid
and binding agreement of the Company, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; to such
counsel's knowledge, the Top End Acquisition Agreement has not been
terminated by either party and remains in full force and effect; and to
such counsel's knowledge, no action or proceeding has been instituted
against the Company which seeks to, or would, render it unlawful to
consummate the Top End Acquisition Agreement in accordance with its terms.
(c) On the date of the Offering Circular prior to the execution of
this Agreement and also at each Time of Delivery, Ernst & Young LLP shall
have furnished to you a letter or letters,
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dated the respective dates of delivery thereof, in form and substance
reasonably satisfactory to you, to the effect set forth in Annex I hereto;
(d) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Offering Circular any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Offering Circular, and (ii) since the respective dates as of which
information is given in the Offering Circular there shall not have been any
change in the capital stock (except for stock options issued in the
ordinary course of business, Stock issued upon exercise of stock options or
Stock issued under the Company's employee stock purchase plan, since the
date of the Offering Circular pursuant to stock option or incentive plans
described in the Offering Circular) or long-term debt of the Company or any
of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated
in the Offering Circular, the effect of which, in any such case described
in Clause (i) or (ii), is in the judgment of the Purchasers so material and
adverse as to make it impracticable or inadvisable to proceed with the
offering or the delivery of the Securities being issued at such Time of
Delivery on the terms and in the manner contemplated in this Agreement and
in the Offering Circular;
(e) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any of the Company's debt securities
(f) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the Nasdaq National Market; (ii) a suspension or
material limitation in trading in the Company's securities on the Nasdaq
National Market; (iii) a general moratorium on commercial banking
activities declared by either Federal or New York State authorities; (iv)
the outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war, if the
effect of any such event specified in this Clause; (iv) in the judgment of
the Purchasers makes it impracticable or inadvisable to proceed with the
offering or the delivery of the Securities being issued at such Time of
Delivery on the terms and in the manner contemplated in the Offering
Circular; or (v) the occurrence of any material adverse change in the
existing, financial, political or economic conditions in the United States
or elsewhere which, in the judgment of the Purchasers, would materially and
adversely affect the financial markets or the markets for the Securities
being issued at such Time of Delivery and other debt securities or any
equity securities.
(g) The Securities have been designated for trading on PORTAL;
(h) The shares of Stock issuable upon conversion of the Securities
shall have been duly listed, subject to notice of issuance, on the Nasdaq
National Market; and
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(i) The Company shall have furnished or caused to be furnished to you
at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as to
the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth
in subsection (d) of this Section and as to such other matters as you may
reasonably request.
8. (a) The Company will indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several, to
which such Purchaser may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Offering Circular or the Offering Circular, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein
not misleading, and will reimburse each Purchaser for any legal or other
expenses reasonably incurred by such Purchaser in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Purchaser through Goldman, Sachs & Co. expressly for use
therein.
(b) Each Purchaser will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Offering Circular or the Offering
Circular, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Offering Circular or the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Purchaser through Goldman,
Sachs & Co. expressly for use therein; and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly
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with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to
act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and the Purchasers on the other from the offering of the
Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then
each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company on
the one hand and the Purchasers on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Purchasers on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Purchasers, in each case as set
forth in the Offering Circular. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one
hand or the Purchasers on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Purchasers agree that it would
not be just and equitable if contribution pursuant to this subsection (d)
were determined by pro rata allocation (even if the Purchasers were treated
as one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as
a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the
17
<PAGE>
provisions of this subsection (d), no Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at
which the Securities underwritten by it and distributed to investors were
offered to investors exceeds the amount of any damages which such Purchaser
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The Purchasers'
obligations in this subsection (d) to contribute are several in proportion
to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Purchaser within the meaning of the Act; and the obligations
of the Purchasers under this Section 8 shall be in addition to any
liability which the respective Purchasers may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of
the Company and to each person, if any, who controls the Company within the
meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your
discretion arrange for you or another party or other parties to purchase
such Securities on the terms contained herein at a Time of Delivery. If
within thirty-six hours after such default by any Purchaser you do not
arrange for the purchase of such Securities, then the Company shall be
entitled to a further period of thirty-six hours within which to procure
another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for
the purchase of such Securities, or the Company notifies you that it has so
arranged for the purchase of such Securities, you or the Company shall have
the right to postpone such Time of Delivery for a period of not more than
seven days, in order to effect whatever changes may thereby be made
necessary in the Offering Circular, or in any other documents or
arrangements, and the Company agrees to prepare promptly any amendments to
the Offering Circular which in your opinion may thereby be made necessary.
The term "Purchaser" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal amount
of such Securities which remains unpurchased does not exceed one-eleventh
of the aggregate principal amount of all the Securities to be purchased at
such Time of Delivery, then the Company shall have the right to require
each non-defaulting Purchaser to purchase the principal amount of
Securities which such Purchaser agreed to purchase hereunder at such Time
of Delivery and, in addition, to require each non-defaulting Purchaser to
purchase its pro rata share (based on the principal amount of Securities
which such Purchaser agreed to purchase hereunder) of the Securities of
such defaulting Purchaser or Purchasers for which such arrangements have
not been made; but nothing herein shall relieve a defaulting Purchaser from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a)
18
<PAGE>
above, the aggregate principal amount of Securities which remains
unpurchased exceeds one-eleventh of the aggregate principal amount of all
the Securities to be purchased at such Time of Delivery, or if the Company
shall not exercise the right described in subsection (b) above to require
non-defaulting Purchasers to purchase Securities of a defaulting Purchaser
or Purchasers, then this Agreement (or, with respect to the Second Time of
Delivery, the obligation of the Purchasers to purchase and of the Company
to sell the Optional Securities) shall thereupon terminate, without
liability on the part of any non-defaulting Purchaser or the Company,
except for the expenses to be borne by the Company and the Purchasers as
provided in Section 6 hereof and the indemnity and contribution agreements
in Section 8 hereof; but nothing herein shall relieve a defaulting
Purchaser from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Purchasers, as set
forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Purchaser or any controlling person of
any Purchaser, or the Company, or any officer or director or controlling
person of the Company, and shall survive delivery of and payment for the
Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Purchaser except
as provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided
herein, the Company will reimburse the Purchasers through you for all out-
of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Purchasers in making
preparations for the purchase, sale and delivery of the Securities, but the
Company shall then be under no further liability to any Purchaser except as
provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Purchaser made
or given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
Purchasers.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex
or facsimile transmission to you as the Purchasers in care of Goldman,
Sachs & Co., 85 Broad Street, New York, New York 10004, Attention:
Registration Department; and if to the Company shall be delivered or sent
by mail, telex or facsimile transmission to the address of the Company set
forth in the Offering Circular, Attention: Secretary; provided, however,
that any notice to a Purchaser pursuant to Section 8(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such
Purchaser at its address set forth in its Purchasers' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to
the Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchasers, the Company and, to the extent provided in Sections 8
and 10 hereof, the officers and directors
19
<PAGE>
of the Company and each person who controls the Company or any Purchaser,
and their respective heirs, executors, administrators, successors and
assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Securities from any
Purchaser shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be
an original, but all such respective counterparts shall together constitute
one and the same instrument.
20
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
Very truly yours,
BEA Systems, Inc.
By: /s/ Steve L. Brown
-------------------------------
Name: Steve L. Brown
Title: Ex. VP, CFO, Secretary
Accepted as of the date hereof:
Goldman, Sachs & Co.
BancAmerica Robertson Stephens
BT Alex. Brown Incorporated
Deutsche Bank Securities Inc.
SoundView Financial Group, Inc.
By: /s/ Goldman, Sachs & Co.
--------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
21
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL
PRINCIPAL AMOUNT OF
AMOUNT OF FIRM OPTIONAL SECURITIES
SECURITIES TO BE PURCHASED
TO BE IF MAXIMUM
PURCHASER PURCHASED OPTION EXERCISED
--------- --------- ----------------
<S> <C> <C>
Goldman, Sachs & Co. ................$100,000,000 $25,000,000
BancAmerica Robertson Stephens....... 30,000,000 7,500,000
BT Alex. Brown Incorporated.......... 30,000,000 7,500,000
Deutsche Bank Securities Inc......... 30,000,000 7,500,000
SoundView Financial Group, Inc....... 10,000,000 2,500,000
____________ ___________
Total $200,000,000 $50,000,000
============ ===========
</TABLE>
22
<PAGE>
ANNEX I
Pursuant to Section 7(d) of the Purchase Agreement, the accountants shall
furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Securities
Exchange Act of 1934 (the "Exchange Act") and the applicable published
rules and regulations thereunder.
(ii) In our opinion, the consolidated financial statements and
financial statement schedules audited by us and included in the Offering
Circular comply as to form in all material respects with the applicable
requirements of the Exchange Act and the related published rules and
regulations;
(iii) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Offering
Circular agrees with the corresponding amounts (after restatements where
applicable) in the audited consolidated financial statements for such five
fiscal years;
(iv) On the basis of limited procedures not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Offering Circular, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) The unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in
the Offering Circular are not in conformity with generally accepted
accounting principles applied on the basis substantially consistent
with the basis for the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Offering Circular;
(B) Any other unaudited income statement data and balance sheet
items included in the Offering Circular do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Offering Circular;
(C) The unaudited financial statements which were not included in
the Offering Circular but from which were derived any unaudited
condensed financial statements
<PAGE>
referred to in Clause (A) and any unaudited income statement data and
balance sheet items included in the Offering Circular and referred to
in Clause (B) were not determined on a basis substantially consistent
with the basis for the audited consolidated financial statements
included in the Offering Circular;
(D) Any unaudited pro forma consolidated condensed financial
statements included in the Offering Circular do not comply as to form
in all material respects with the applicable accounting requirements
or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial statements
included in the Offering Circular or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any decreases
in consolidated net current assets or stockholders' equity or other
items specified by the Purchasers, or any increases in any items
specified by the Purchasers, in each case as compared with amounts
shown in the latest balance sheet included in the Offering Circular
except in each case for changes, increases or decreases which the
Offering Circular discloses have occurred or may occur or which are
described in such letter; and
(F) For the period fro the date of the latest financial
statements included in the Offering Circular to the specified date
referred to in Clause (E) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the Purchasers, or
any increases in any items specified by the purchasers, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the Purchasers,
except in each case for decreases or increases which the Offering
Circular discloses have occurred or may occur or which are described
in such letter; and
(v) In addition to the examination referred to in their report(s)
included in the Offering Circular and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraphs
(iii) and (iv) above, they have carried out certain specified procedures,
not constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Purchasers, which are derived from the general
accounting records of the Company and its subsidiaries, which appear in the
Offering Circular, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
2
<PAGE>
Exhibit 4.6
BEA SYSTEMS, INC.
4% CONVERTIBLE SUBORDINATED NOTES
DUE JUNE 15, 2005
REGISTRATION RIGHTS AGREEMENT
Dated as of June 1, 1998
Goldman, Sachs & Co.
BancAmerica Robertson Stephens
BT Alex. Brown Incorporated
Deutsche Bank Securities Inc.
SoundView Financial Group, Inc.
c/o Goldman, Sachs & Co.
555 California Street, 45th Floor
San Francisco, California 94104
Ladies and Gentlemen:
BEA Systems, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to the Purchasers (as defined herein) upon the terms set forth in
a Purchase Agreement (as defined herein) its 4% Convertible Subordinated Notes
due June 1, 2005 (the "Securities"). As an inducement to the Purchasers to
enter into the Purchase Agreement and in satisfaction of a condition to the
obligations of the Purchasers thereunder, the Company agrees with the
Purchasers, for the benefit of the Holders (as defined herein) from time to time
of the Registrable Securities (as defined herein), as follows:
1. DEFINITIONS. Capitalized terms used herein without definition shall
have their respective meanings set forth in or pursuant to the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Act" or "Securities Act" means the United States Securities Act of 1933,
as amended.
"Affiliate" of any specified person means any other person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with such specified person. For purposes of this definition, control of a
person means the power, direct or indirect, to direct or cause the direction
-1-
<PAGE>
of the management and policies of such person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Stock" means the Company's Common Stock, par value $0.001 per
share.
"Commission" means the United States Securities and Exchange Commission.
"DTC" means The Depository Trust Company.
"Effective Failure" has the meaning assigned thereto in Section 7 hereof.
"Effective Time" means the date on which the Commission declares the Shelf
Registration Statement effective or on which the Shelf Registration Statement
otherwise becomes effective.
"Effectiveness Period" has the meaning set forth in Section 2(b)(i) hereof.
"Electing Holder" has the meaning assigned thereto in Section 3(a)(3)
hereof.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended.
"Expedited Filing" has the meaning assigned thereto in Section 3(a)(1)
hereof.
"Expedited Filing Questionnaire Deadline" has the meaning assigned thereto
in Section 3(a)(1) hereof.
"Holder" means any Person that has a beneficial interest in any Restricted
Global Security or any beneficial interest in a global security representing
shares of Common Stock issuable upon conversion of a Security.
"Indenture" means the Indenture dated as of June 1, 1998 between the
Company and State Street Bank and Trust Company of California, N.A., as Trustee,
as amended and supplemented from time to time.
"Liquidated Damages" has the meaning assigned thereto in Section 7 hereof.
"Managing Underwriters" means the investment banker or investment bankers
and manager or managers that shall administer an underwritten offering, if any,
as set forth in Section 6 hereof.
"NASD Rules" means the Rules of the National Association of Securities
Dealers, Inc., as amended from time to time.
"Notice and Questionnaire" means a Notice of Registration Statement and
Selling Securityholder Questionnaire substantially in the form of Exhibit A
hereto.
-2-
<PAGE>
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" means the prospectus included in any Shelf Registration
Statement (including, without limitation, any preliminary prospectus, any final
prospectus and any prospectus that discloses information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A under the Act), included in the Shelf Registration Statement, as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Shelf Registration Statement and by all other amendments and supplements to such
prospectus, including all material incorporated by reference in such prospectus
and all documents filed after the date of such prospectus by the Company under
the Exchange Act and incorporated by reference therein.
"Purchase Agreement" means the purchase agreement dated June 8, 1998
between the Company and the Purchasers.
"Purchasers" means you, as the Purchasers named in Schedule I to the
Purchase Agreement.
"Registrable Securities" means all or any portion of the Securities issued
from time to time under the Indenture in registered form and the Common Stock
issuable upon conversion or repurchase of such Securities; provided, however,
that a security ceases to be a Registrable Security when it is no longer a
Restricted Security.
"Registration Default" has the meaning assigned thereto in Section 7
hereof.
"Restricted Security" means any Security or share of Common Stock issuable
upon conversion or repurchase thereof except any such Security or such share of
Common Stock which (i) has been effectively registered under the Securities Act
and sold in a manner contemplated by the Shelf Registration Statement, (ii) has
been transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto) or is transferable pursuant to paragraph (k) of
such Rule 144 (or any successor provision thereto), or (iii) has otherwise been
transferred and a new Security or share of Common Stock not subject to transfer
restrictions under the Securities Act has been delivered by or on behalf of the
Company in accordance with Section 3.5 of the Indenture.
"Shelf Registration" means a registration effected pursuant to Section 2
hereof.
"Shelf Registration Statement" means a shelf registration statement of the
Company pursuant to the provisions of Section 2 hereof filed with the Commission
which covers some or all of the Registrable Securities, as applicable, on an
appropriate form under Rule 415 under the Act, or any similar rule that may be
adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
-3-
<PAGE>
"Underwriter" means any underwriter of Registrable Securities in connection
with an offering thereof under a Shelf Registration Statement.
2. SHELF REGISTRATION.
(a) The Company shall, within 90 calendar days following the First
Time of Delivery (as defined in the Purchase Agreement), file with the
Commission a Shelf Registration Statement relating to the offer and sale of the
Registrable Securities by the Holders and, thereafter, shall use all reasonable
efforts to cause such Shelf Registration Statement to be declared effective
under the Securities Act within 180 calendar days after the First Time of
Delivery (as defined in the Purchase Agreement); provided, however, that the
Company may, upon written notice to all the Holders, postpone having the Shelf
Registration Statement declared effective for a reasonable period not to exceed
90 days if the Company possesses material non-public information, the disclosure
of which would have a material adverse effect on the Company and its
subsidiaries taken as a whole; provided, further, however, that no Holder shall
be entitled to have the Registrable Securities held by it covered by such Shelf
Registration unless such Holder is an Electing Holder.
(b) The Company shall use all reasonable efforts:
(i) To keep the Shelf Registration Statement continuously
effective in order to permit the Prospectus forming part thereof to be usable by
Electing Holders for a period of two years from the date it is declared
effective, or such shorter period that will terminate when there are no
Registrable Securities outstanding (in either case, such period being referred
to herein as the "Effectiveness Period");
(ii) After the Effective Time of the Shelf Registration
Statement, promptly upon the request of any Holder of Registrable Securities
that is not then an Electing Holder, to take any action reasonably necessary to
enable such Holder to use the Prospectus forming a part thereof for offers and
resales of Registrable Securities, including, without limitation, any action
reasonably necessary to identify such Holder as a selling securityholder in the
Shelf Registration Statement; provided, however, that nothing in this
subparagraph shall relieve such Holder of the obligation to return a completed
and signed Notice and Questionnaire to the Company in accordance with Sections
3(a)(1) or 3(a)(2) hereof; and
(iii) If at any time, the Securities, pursuant to Article XII of
the Indenture, are convertible into securities other than shares of Common
Stock, the Company shall, or shall cause any successor under the Indenture to,
cause such securities to be included in the Shelf Registration Statement no
later than the date on which the Securities may then be convertible into such
securities.
The Company shall be deemed not to have used all reasonable efforts to keep
the Shelf Registration Statement effective during the Effectiveness Period if
the Company voluntarily takes any action that would result in Electing Holders
not being able to offer and sell any of their Registrable Securities during such
period, unless (i) such action is required by applicable law or regulation, (ii)
the Company determines based on the advice of counsel that it is advisable to
disclose
-4-
<PAGE>
in the Shelf Registration Statement a financing, acquisition or other corporate
transaction or other material event or circumstance affecting the Company or its
securities, and the Board of Directors of the Company (or an executive officer
of the Company duly authorized for such purpose) shall have determined in good
faith that such disclosure at such time is not in the best interests of the
Company and its stockholders, and, in the case of clause (i) above, the Company
thereafter promptly complies with the requirements of paragraph 3(h) below.
3. REGISTRATION PROCEDURES. In connection with any Shelf Registration
Statement, the following provisions shall apply:
(a)(1) If the Company expects to file and obtain the effectiveness
of a Shelf Registration Statement within 30 days of the date hereof (an
"Expedited Filing"), it shall (x) mail, as promptly as reasonably practicable
after the date hereof to the Holders of Registrable Securities, a Notice and
Questionnaire with a response deadline of 30 days from the date of such Notice
(the "Expedited Filing Questionnaire Deadline"), and (y) as promptly as
reasonably practicable after the response deadline but in any event no later
than 10 days thereafter, prepare a Prospectus supplement (and if required file
an amendment or a supplement to the Shelf Registration Statement) or take such
other measures, if any, as are necessary to include in the Shelf Registration
Statement the Registrable Securities of Electing Holders. If the Company does
not intend to make an Expedited Filing, it shall mail the Notice and
Questionnaire to the Holders of Registrable Securities not less than 30 calendar
days prior to the Effective Time of the Shelf Registration Statement. Subject to
this Section 3(a)(2), no Holder of Registrable Securities shall be entitled to
be named as a selling securityholder in the Shelf Registration Statement as of
the Effective Time (or in the first Prospectus supplement filed thereafter in
the case of an Expedited Filing), and no Holder of Registrable Securities shall
be entitled to use the Prospectus forming a part thereof for offers and resales
of Registrable Securities at any time, unless such Holder has returned a
completed and signed Notice and Questionnaire to the Company by the deadline for
response set forth therein; provided, however, that Holders of Registrable
Securities shall have at least 28 calendar days from the date on which the
Notice and Questionnaire is first mailed to such Holders to return a completed
and signed Notice and Questionnaire to the Company.
(2) After the Effective Time of the Shelf Registration Statement
(or the Expedited Filing Questionnaire Deadline in the case of an Expedited
Filing), the Company shall, upon the request of any Holder of Registrable
Securities that is not then an Electing Holder, as promptly as reasonably
practicable, send a Notice and Questionnaire to such Holder. The Company shall
not be required to take any action to name such Holder as a selling
securityholder in the Shelf Registration Statement until such Holder has
returned a completed and signed Notice and Questionnaire to the Company.
Following its receipt of such Notice and Questionnaire, the Company will
reasonably promptly include the Registrable Securities covered thereby in the
Shelf Registration Statement (if not previously included).
(3) The term "Electing Holder" shall mean any Holder of
Registrable Securities that has returned a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(a)(1) or 3(a)(2)
hereof.
-5-
<PAGE>
(b) The Company shall, as promptly as reasonably practicable,
take such action as may be necessary so that (i) each of the Shelf Registration
Statement and any amendment thereto and any Prospectus forming part thereof and
any amendment or supplement thereto (and each report or other document
incorporated therein by reference in each case) complies in all material
respects with the Securities Act and the Exchange Act and the respective rules
and regulations thereunder, (ii) each of the Shelf Registration Statement and
any amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(iii) each of the Prospectus forming part of the Shelf Registration Statement,
and any amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(c)(i) The Company shall, as promptly as reasonably practicable,
advise each Electing Holder and shall confirm such advice in writing if so
requested by any such Electing Holder:
(1) when a Shelf Registration Statement and any
amendment thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has become
effective;
(2) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus included
therein or for additional information;
(3) of the issuance by the Commission of any stop
order suspending effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose; and
(4) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the securities included
in the Shelf Registration Statement for sale in any jurisdiction or the
initiation of any proceeding for such purpose.
(ii) The Company shall, as promptly as reasonably
practicable, advise DTC and the trustee under the Indenture of the happening of
any event or the existence of any state of facts that requires the making of any
changes in the Shelf Registration Statement or the Prospectus included therein
so that, as of such date, the Shelf Registration Statement and the Prospectus do
not contain an untrue statement of a material fact and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances under
which they were made) not misleading (which advice shall be accompanied by an
instruction to suspend the use of the Prospectus until the requisite changes
have been made).
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(d) The Company shall use its reasonable best efforts to prevent
the issuance, and if issued to obtain the withdrawal, of any order suspending
the effectiveness of any Shelf Registration Statement at the earliest possible
time.
(e) The Company shall furnish to each Electing Holder, without
charge, at least one copy of such Shelf Registration Statement and any post-
effective amendment thereto, including financial statements and schedules, and,
if the Electing Holder so requests in writing, all reports, other documents and
exhibits that are filed with or incorporated by reference in the Shelf
Registration Statement. The Company shall use all reasonable efforts to take
into account and, if appropriate, reflect in an amendment to the Shelf
Registration Statement such comments on the Shelf Registration Statement as
initially filed as the Electing Holders and their counsel may reasonably
propose.
(f) The Company shall, during the Effectiveness Period, deliver
to each Electing Holder, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in the Shelf Registration
Statement and any amendment or supplement thereto as such Electing Holder may
reasonably request; and the Company consents (except during the continuance of
any event described in Section 3(c)(ii)) to the use of the Prospectus or any
amendment or supplement thereto by each of the Electing Holders in connection
with the offering and sale of the Registrable Securities covered by the
Prospectus or any amendment or supplement thereto during the Effectiveness
Period. The Company shall use all reasonable efforts to take into account and,
if appropriate, reflect in a Prospectus supplement or amendment such comments as
the Electing Holders and their counsel may reasonably propose.
(g) Prior to any offering of Registrable Securities pursuant to
the Shelf Registration Statement, the Company shall (i) register or qualify or
cooperate with the Electing Holders and their respective counsel in connection
with the registration or qualification of such Registrable Securities for offer
and sale under the securities or blue sky laws of such jurisdictions as any such
Electing Holders reasonably request, (ii) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers and sales in such jurisdictions for so long as may be
necessary to enable any Electing Holder or underwriter, if any, to complete its
distribution of Registrable Securities pursuant to the Shelf Registration
Statement and (iii) take any and all other actions necessary or advisable to
enable the disposition in such jurisdictions of such Registrable Securities;
provided, however, that in no event shall the Company be obligated to (a)
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to so qualify but for this
Section 3(g), or (b) file any general consent to service of process in any
jurisdiction where it is not as of the date hereof then so subject.
(h) Upon the occurrence of any event contemplated by paragraph
3(c)(ii) above, the Company shall as promptly as reasonably practicable prepare
a post-effective amendment or supplement to the Shelf Registration Statement or
the Prospectus, or any document incorporated therein be reference, or file any
other required document so that, as thereafter delivered to purchasers of the
Registrable Securities included therein, the Prospectus will not include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light
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of the circumstances under which they were made, not misleading; provided,
however, if the Company determines based upon the advice of counsel that it is
advisable to disclose in the Shelf Registration Statement a financing,
acquisition or other corporate transaction or other material event affecting the
Company or its securities, and the Board of Directors of the Company (or an
executive officer of the Company duly authorized for such purpose) shall have
determined in good faith that such disclosure would not be in the best interests
of the Company and its stockholders, the Company shall not be required to
prepare and file such amendment, supplement or document for such period as the
Board of Directors of the Company shall have determined in good faith is in the
best interests of the Company and its stockholders. If the Electing Holders are
notified of the occurrence of any event contemplated by paragraph 3(c)(ii)
above, the Electing Holders shall suspend the use of the Prospectus until the
requisite changes to the Prospectus have been made.
(i) Not later than the Effective Time of the Shelf Registration
Statement, the Company shall provide a CUSIP number for the Registrable
Securities that are debt securities.
(j) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable, but in any event not
later than eighteen months after (i) the effective date (as defined in Rule
158(c) under the Securities Act of the Shelf Registration Statement and (ii) the
effective date of each post-effective amendment to the Shelf Registration
Statement and (iii) the date of each filing by the Company with the Commission
of an Annual Report on Form 10-K or 10-KSB that is incorporated by reference in
the Shelf Registration Statement, an earnings statement of the Company and its
subsidiaries satisfying the provisions of Section 11(a) of the Securities Act.
(k) The Company shall cause the Indenture and the Securities to
be qualified under the Trust Indenture Act in a timely manner; and in connection
with such qualification, the Company shall cooperate with the Trustee under the
Indenture and the Holders (as defined in the Indenture) to effect such changes
to the Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the Trust Indenture Act; and the Company shall
execute and use all reasonable efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other forms and
documents required to be filed with the Commission to enable such Indenture to
be so qualified in a timely manner.
(l) In the event of an underwritten offering conducted pursuant
to Section 6 hereof, the Company shall, if requested, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to the Shelf
Registration Statement such information as the Managing Underwriters reasonably
agree should be included therein and to which the Company does not reasonably
object and shall make all required filings of such Prospectus supplement or
post-effective amendment as soon as reasonably practicable after it is notified
of the matters to be included or incorporated in such Prospectus supplement or
post-effective amendment.
(m) The Company shall enter into such customary agreements
(including underwriting agreements in customary form) and take all other
appropriate actions in order to expedite or facilitate the registration and
disposition of the Registrable Securities, and in connection
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therewith, if an underwriting agreement is entered into, cause the same to
contain indemnification and contribution provisions and procedures substantially
identical to those set forth in Section 5 (or such other provisions and
procedures acceptable to the Managing Underwriters, if any) with respect to all
parties to be indemnified pursuant to Section 5 hereof.
(n) The Company shall:
(i) make reasonably available for inspection by one
representative of the Electing Holders designated in writing by the Holders of a
majority of the Registrable Securities to be registered thereunder, any
underwriter participating in any underwritten offering pursuant to Section 6
hereof, and any attorney, accountant or other agent retained by such
representative or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, as is customary for similar due diligence examinations;
(ii) cause the Company's officers, directors and employees
to make reasonably available for inspection all relevant information reasonably
requested by such representative or any such underwriter, attorney, accountant
or agent in connection with any such Shelf Registration Statement, in each case,
as is customary for similar due diligence examinations; provided, however, that
any information that is designated in writing by the Company, in good faith, as
confidential at the time of delivery of such information shall be kept
confidential by such representative, any Holders or any such underwriter,
attorney, accountant or agent, unless (x) such disclosure is made in connection
with a court proceeding or required by law, or (y) such information becomes
available to the public generally or through a third party without an
accompanying obligation of confidentiality; and provided, further, that as
promptly as reasonably practicable before disclosure is made pursuant to clause
(x) above, the Company is given prior written notice.
(iii) in connection with any underwritten offering conducted
pursuant to Section 6 hereof, make such representations and warranties to the
Electing Holders and the underwriters, if any, in form, substance and scope as
are customarily made by the Company to underwriters in primary underwritten
offerings and covering matters including, but not limited to, those set forth in
the Purchase Agreement;
(iv) in connection with any underwritten offering conducted
pursuant to Section 6 hereof, obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the Managing Underwriters, if any) addressed to
each Electing Holder and the underwriters, if any, covering such matters as are
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Electing Holders and
underwriters (it being agreed that the matters to be covered by such opinion or
written statement by such counsel delivered in connection with such opinions
shall include in customary form, without limitation, as of the date of the
opinion and as of the effective date of the Shelf Registration Statement or most
recent post-effective amendment thereto, as the case may be, the absence from
such Shelf Registration Statement and the Prospectus included therein, as then
amended or supplemented, including the
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documents incorporated by reference therein, of an untrue statement of a
material fact or the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading);
(v) in connection with any underwritten offering conducted
pursuant to Section 6 hereof, obtain "cold comfort" letters and updates thereof
from the independent public accountants of the Company (and, if necessary, any
other independent public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and financial
data are, or are required to be, included in the Shelf Registration Statement),
addressed to each Electing Holder and the underwriters, if any, in customary
form and covering matters of the type customarily covered in "cold comfort"
letters in connection with primary underwritten offerings;
(vi) in connection with any underwritten offering conducted
pursuant to Section 6 hereof, deliver such documents and certificates as may be
reasonably requested by any such Electing Holders and the Managing Underwriters,
if any, including those to evidence compliance with Section 3(h) hereof and with
any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
(o) The Company will use its reasonable best efforts to cause
the shares of Common Stock issuable upon conversion of the Securities to be
quoted on the Nasdaq National Market or other trading system or stock exchange
on which the Common Stock primarily trades on or prior to the Effective Time of
any Shelf Registration Statement hereunder.
(p) In the event that any broker-dealer registered under the
Exchange Act shall be an "affiliate" (as defined in Rule 2720(b)(1) of the NASD
Rules (or any successor provision thereto)) of the Company or has a "conflict of
interest" (as defined in Rule 2720(b)(7) of the NASD Rules (or any successor
provision thereto)) and such broker-dealer shall underwrite, participate as a
member of an underwriting syndicate or selling group or assist in the
distribution of any Registrable Securities covered by the Shelf Registration
Statement, whether as a Holder of such Registrable Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, assist such broker or dealer in respect thereof, or
otherwise, the Company shall assist such broker-dealer in complying with the
requirements of the NASD Rules, including, without limitation, by (A) engaging a
"qualified independent underwriter" (as defined in Rule 2720(b)(15) of the NASD
Rules (or any successor provision thereto)) to participate in the preparation of
the Shelf Registration Statement relating to such Registrable Securities, to
exercise usual standards of due diligence in respect thereto and to recommend
the public offering price of such Registrable Securities, (B) indemnifying any
such qualified independent underwriter to the extent of the indemnification of
underwriters provided in Section 5 hereof, and (C) providing such information to
such broker- dealer as may be required in order for such broker-dealer to comply
with the requirements of the NASD Rules.
(q) The Company shall use all reasonable efforts to take all
other steps necessary to effect the registration, offering and sale of the
Registrable Securities covered by the Shelf Registration Statement contemplated
hereby.
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4. REGISTRATION EXPENSES. The Company shall bear all fees and expenses
incurred in connection with the performance of its obligations under Sections 2,
3 and 6 hereof and shall bear or reimburse the Electing Holders for the
reasonable fees and disbursements of one firm of counsel designated by the
Company and reasonably acceptable to the Holders of a majority of the
Registrable Securities covered by the Shelf Registration Statement to act as
counsel therefor in connection therewith, subject to the provisions of Section 6
with respect to the payment of fees and expenses in connection with an
underwritten offering.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification by the Company. In connection with any Shelf
Registration Statement, the Company shall indemnify and hold harmless each
Electing Holder and each underwriter, selling agent or other securities
professional, if any, who facilitates the disposition of Registrable Securities,
and each of their respective officers and directors and each person, if any, who
controls such Electing Holder, underwriter, selling agent or other securities
professional within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act (each such person being sometimes referred to herein as
an "Indemnified Person") against any losses, claims, damages or liabilities,
joint or several, to which such Indemnified Person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based on any
untrue statement or alleged untrue statement of a material fact contained in any
Shelf Registration Statement (or any amendment thereto) under which such
Registrable Securities are registered under the Securities Act, or any
Prospectus contained therein or furnished by the Company to any Indemnified
Person, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not misleading (in
the case of the Prospectus, in light of the circumstances under which they were
made), and the Company hereby agrees to reimburse such Indemnified Person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable to any such
Indemnified Person in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such Shelf
Registration Statement or Prospectus, or any amendment or supplement thereto, in
reliance upon and in conformity with written information furnished to the
Company by such Indemnified Person expressly for use therein.
(b) Indemnification by the Holders and Any Agents and Underwriters.
Each Electing Holder agrees, as a consequence of the inclusion of any such
holder's Registrable Securities in such Shelf Registration Statement, and each
underwriter, selling agent or other securities professional, if any, who
facilitates the disposition of Registrable Securities shall agree, as a
consequence of facilitating such disposition of Registrable Securities,
severally and not jointly, to (i) indemnify and hold harmless the Company, its
directors, officers who sign any Shelf Registration Statement and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses, claims,
damages or liabilities to which the Company or such other persons may become
subject, under the Securities Act
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<PAGE>
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in such Shelf Registration
Statement or Prospectus, or any amendment or supplement thereto, or arise out of
or are based upon an omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading (in the case of the Prospectus, in light of the circumstances
under which they were made), in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Electing Holder, underwriter, selling agent or
other securities professional expressly for use therein and (ii) reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Notices and Claims. Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under this Section 5, notify such indemnifying
party in writing of the commencement thereof; but the omission to so notify the
indemnifying party shall not relieve it from any liability which it may have to
the indemnified party otherwise than under this Section 5. In case any such
action shall be brought against any indemnified party and it shall notify an
indemnifying party of the commencement thereof, such indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party) and, after notice from the indemnifying party of its
election so to assume the defense thereof, such indemnifying party shall not be
liable to such indemnified party under this Section 5 for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act, by or on behalf of any
indemnified party.
(d) Contribution. If the indemnification provided for in this Section 5
is unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) of this Section 5 in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such losses, claims, damages
and liabilities (or actions in respect thereof), as well as any other relevant
equitable
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considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such
indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 5(d) were determined by
pro rata allocation (even if the Electing Holders or any underwriters, selling
agents or other securities professionals or all of them were treated as one
entity for such purpose) or by any other method of allocation that does not take
into account the equitable considerations referred to in this Section 5(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. 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 obligations of the Electing Holders and any underwriters,
selling agents or other securities professionals in this Section 5(d) to
contribute shall be several in proportion to the percentage of principal amount
of Registrable Securities registered or underwritten, as the case may be, by
them and not joint.
(e) Notwithstanding any other provision of this Section 5, in no
event shall any Electing Holder be required to undertake liability to any person
under this Section 5 for any amounts in excess of the dollar amount of the
proceeds received by such Electing Holder from the sale of such Electing
Holder's Registrable Securities (after deducting any fees, discounts and
commissions applicable thereto) pursuant to any Shelf Registration Statement
under which such Registrable Securities are registered under the Securities Act.
(f) The obligations of the Company under this Section 5 shall be in
addition to any liability which the Company may otherwise have to any
Indemnified Person and the obligations of any Electing Holder, underwriter,
selling agent or other securities professional under this Section 5 shall be in
addition to any liability which any such Electing Holder, underwriter, selling
agent or other securities professional shall otherwise have to the Company. The
remedies provided in this Section 5 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to an indemnified party at
law or in equity.
6. UNDERWRITTEN OFFERING. Any Electing Holder who desires to do so may
sell Registrable Securities (in whole or in part) in an underwritten offering,
provided that (i) the Electing Holders of at least 25% in aggregate principal
amount of the Registrable Securities then covered by the Shelf Registration
Statement shall request such an offering and (ii) at least such aggregate
principal amount of such Registrable Securities shall be included in such
offering, and provided, further, that the Company shall not be obligated to
cooperate with more than one underwritten offering. Upon receipt of such a
request, the Company shall provide all Holders of Registrable Securities written
notice of the request, which notice shall inform such Holders that they have the
opportunity to participate in the offering. In any such underwritten offering,
the investment banker
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or bankers and manager or managers that will administer the offering will be
selected by, and the underwriting arrangements with respect thereto will be
approved by the Holders of a majority of the Registrable Securities to be
included in such offering; provided, however, that such investment bankers and
managers and underwriting arrangements must be reasonably satisfactory to the
Company. No Holder may participate in any underwritten offering contemplated
hereby unless (a) such Holder agrees to sell such Holder's Registrable
Securities to be included in the underwritten offering in accordance with any
approved underwriting arrangements, (b) such Holder completes and executes all
reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of such
approved underwriting arrangements, and (c) if such Holder is not then an
Electing Holder, such Holder returns a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(a)(2) hereof within a
reasonable amount of time before such underwritten offering. The Holders
participating in any underwritten offering shall be responsible for any
underwriting discounts and commissions and fees and expenses of their own
counsel. The Company shall pay all expenses customarily borne by issuers in an
underwritten offering, including but not limited to filing fees, the fees and
disbursements of its counsel and accountants and any printing expenses incurred
in connection with such underwritten offering. Notwithstanding the foregoing or
the provisions of Sections 3(l) and 3(m) hereof, upon receipt of a request from
the Managing Underwriter or a representative of Holders of a majority of the
Registrable Securities to be included in an underwritten offering to prepare and
file an amendment or supplement to the Shelf Registration Statement and
Prospectus in connection with an underwritten offering, the Company may delay
the filing of any such amendment or supplement for up to 60 days if the Board of
Directors of the Company (or an executive officer of the Company duly authorized
for such purpose) shall have determined in good faith that the Company has a
valid business reason for such delay.
7. LIQUIDATED DAMAGES. Pursuant to Section 2(a) hereof, the Company may,
upon written notice to all the Holders, postpone having the Shelf Registration
Statement declared effective for a reasonable period not to exceed 90 days if
the Company possesses material non-public information, the disclosure of which
would have a material adverse effect on the Company and its subsidiaries taken
as a whole. Notwithstanding any such postponement, if (i) on or prior to the
90th day following the date of the First Time of Delivery (as defined in the
Purchase Agreement), a Shelf Registration Statement has not been filed with the
Commission or (ii) on or prior to the 180th day following the date of the First
Time of Delivery (as defined in the Purchase Agreement), such Shelf Registration
Statement is not declared effective by the Commission (each, a "Registration
Default"), the Company shall be required to pay liquidated damages ("Liquidated
Damages"), from and including the day following such Registration Default until
such Shelf Registration Statement is either so filed or so filed and
subsequently declared effective, as applicable. Such Liquidated Damages shall be
paid semi-annually in arrears, with the first semi-annual payment due on the
first Interest Payment Date (as defined in the Indenture), as applicable,
following the date of such Registration Default, and will accrue at a rate per
annum equal to an additional one-quarter of one percent (0.25%) of the principal
amount of Restricted Securities, to and including the 90th day following such
Registration Default and one-half of one percent (0.5%) thereof from and after
the 91st day following such Registration Default. In the event that the Shelf
Registration Statement ceases to be effective (or the Holders of Registrable
Securities are otherwise prevented or restricted
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by the Company from effecting sales pursuant thereto) (an "Effective Failure")
for more than 60 days, whether or not consecutive, during any twelve-month
period, then the Company shall pay Liquidated Damages in the amount of one-half
of one percent (0.5%) per annum from the 61st day of the applicable twelve-month
period such Shelf Registration Statement ceases to be effective (or the Holders
of Registrable Securities are otherwise prevented or restricted by the Company
from effecting sales pursuant thereto) until such time as the Effective Failure
is cured. For the purpose of determining an Effective Failure, days on which the
Company has been obligated to pay Liquidated Damages in accordance with the
foregoing in respect of a prior Effective Failure within the applicable twelve-
month period shall not be included. The Liquidated Damages as set forth in this
Section 7 shall be the exclusive monetary remedy available to the Holders of
Registrable Securities for such Registration Default or Effective Failure.
8. MISCELLANEOUS.
(a) Other Registration Rights. The Company may grant registration
rights that would permit any Person that is a third party the right to piggy-
back on any Shelf Registration Statement, provided that if the Managing
Underwriter, if any, of any underwritten offering conducted pursuant to Section
6 hereof notifies the Company and the Electing Holders that the total amount of
securities which the Electing Holders and the holders of such piggy-back rights
intend to include in any Shelf Registration Statement is so large as to
materially threaten the success of such offering (including the price at which
such securities can be sold), then the amount, number or kind of securities to
be offered for the account of holders of such piggy-back rights will be reduced
to the extent necessary to reduce the total amount of securities to be included
in such offering to the amount, number or kind recommended by the Managing
Underwriter prior to any reduction in the amount of Registrable Securities to be
included in such Shelf Registration Statement.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this Section 8(b), may be amended, and waivers or
consents to departures from the provisions hereof may be given, only by a
written instrument duly executed by the Company and the Holders of a majority in
aggregate principal amount of Registrable Securities then outstanding. Each
Holder of Registrable Securities outstanding at the time of any such amendment,
waiver or consent or thereafter shall be bound by any amendment, waiver or
consent effected pursuant to this Section 8(b), whether or not any notice,
writing or marking indicating such amendment, 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, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section 8(c);
(2) if to the Purchasers, initially at the address set forth in
the Purchase Agreement; and
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(3) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly given
when received.
The Purchasers or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties and the
Holders, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Registrable Securities. The Company
hereby agrees to extend the benefits of this Agreement to any Holder of
Registrable Securities and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(e) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
any provisions relating to conflicts of laws.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
(i) Survival. The respective indemnities, agreements,
representations, warranties and other provisions set forth in this Agreement or
made pursuant hereto shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Electing Holder, any director, officer or partner of such Electing
Holder, any agent or underwriter, any director, officer or partner of such agent
or underwriter, or any controlling person of any of the foregoing, and shall
survive the transfer and registration of the Registrable Securities of such
Holder.
-16-
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
BEA Systems, Inc.
By: /s/ Steve L. Brown
---------------------------------
Name: Steve L. Brown
Title: Executive Vice President,
Chief Financial Officer
and Secretary
The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.
Goldman, Sachs & Co.
BancAmerica Robertson Stephens
BT Alex. Brown Incorporated
Deutsche Bank Securities Inc.
SoundView Financial Group, Inc.
By:_________________________________
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
BEA Systems, Inc.
By:_________________________________
Name: Steve L. Brown
Title: Executive Vice President,
Chief Financial Officer
and Secretary
The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.
Goldman, Sachs & Co.
BancAmerica Robertson Stephens
BT Alex. Brown Incorporated
Deutsche Bank Securities Inc.
SoundView Financial Group, Inc.
By: /s/ [SIGNATURE ILLEGIBLE]
---------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
<PAGE>
Exhibit A
BEA SYSTEMS, INC.
INSTRUCTION TO DTC PARTICIPANTS
(DATE OF MAILING)
URGENT -- IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: (DATE)
The Depository Trust Company ("DTC") has identified you as a DTC
Participant through which beneficial interests in BEA Systems, Inc. (the
"Company") 4% Convertible Subordinated Notes due June 15, 2005 (the
"Securities") are held.
The Company is in the process of registering the Securities under the
Securities Act of 1933, as amended, for resale by the beneficial owners thereof.
In order to have their Securities included in the registration statement,
beneficial owners, INCLUDING BENEFICIAL OWNERS RESIDENT OUTSIDE THE UNITED
STATES, must complete and return the enclosed Notice of Registration Statement
and Selling Securityholder Questionnaire.
IT IS IMPORTANT THE BENEFICIAL OWNERS OF THE SECURITIES RECEIVE A COPY OF
THE ENCLOSED MATERIALS AS SOON AS POSSIBLE as their rights to have the
Securities included in the registration statement depend upon their returning
the Notice and Questionnaire [DEADLINE FOR RESPONSE]. Please forward a copy of
the enclosed materials to each beneficial owner that holds interests in the
Securities through you. If you require more copies of the enclosed materials or
have any questions regarding this matter, please contact [Name, address and
telephone number of contact at the Company].
<PAGE>
BEA SYSTEMS, INC.
NOTICE OF REGISTRATION STATEMENT AND SELLING SECURITY HOLDER QUESTIONNAIRE
(DATE)
BEA Systems, Inc. (the "Company") has filed or intends shortly to file with
the United States Securities and Exchange Commission (the "Commission") a
registration statement on form S-3 (the "Shelf Registration Statement") for the
registration and resale under the United States Securities Act of 1933, as
amended (the "Securities Act"), of the Company's 4% Convertible Subordinated
Notes due June 15, 2005 (CUSIP No. 073325AAO) (the "Notes"), and Common Stock,
par value $0.001 per share, of the Company issuable upon conversion or
repurchase thereof, in accordance with the terms of the Registration Rights
Agreement dated as of June 1, 1998 (the "Registration Rights Agreement") between
the Company and the purchasers named therein (the "Purchasers"). A copy of the
Registration Rights Agreement is attached hereto. All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Registration Rights Agreement.
In order to have Registrable Securities included in the Shelf Registration
Statement (or a supplement or amendment thereto), this Notice of Registration
Statement and Selling Securityholder Questionnaire ("Notice and Questionnaire")
must be completed, executed and delivered to the Company at the address set
forth herein for receipt ON OR BEFORE [insert date that is 30 days from the
Notice Date] (the "Questionnaire Deadline"). Unless the Company otherwise
consents, beneficial owners of Registrable Securities who do not complete,
execute and return this Notice and Questionnaire by such date (i) will not be
named as selling securityholders in the Shelf Registration Statement (or a
supplement or amendment thereto) and related Prospectus and (ii) may not sell
their Registrable Securities pursuant thereto. Beneficial owners of Registrable
Securities not having returned a Notice and Questionnaire by the Questionnaire
Deadline may, however, receive another Notice and Questionnaire from the Company
upon request. Following its receipt of a completed Notice and Questionnaire in
return, the Company will reasonably promptly include the Registrable Securities
covered thereby in the Shelf Registration Statement.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and related Prospectus.
Accordingly, Holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and related Prospectus.
The term "Registrable Securities" is defined in the Registration Rights
Agreement to mean all or any portion of the Notes issued under the Indenture and
the Common Stock issuable upon conversion or repurchase thereof; provided,
however, that a security ceases to be a Registrable Security when it is no
longer a Restricted Security.
<PAGE>
The term "Restricted Security" is defined in the Registration Rights
Agreement to mean any Note or share of Common Stock issuable upon conversion or
repurchase thereof except any such Note or share of Common Stock which (i) has
been effectively registered under the Securities Act and sold in a manner
contemplated by the Shelf Registration Statement, (ii) has been transferred in
compliance with Rule 144 under the Securities Act (or any successor provision
thereto) or is transferable pursuant to paragraph (k) of such Rule 144 (or any
successor provision thereto), or (iii) has otherwise been transferred and a new
Security or share of Common Stock not subject to transfer restrictions under the
Securities Act has been delivered by or on behalf of the Company in accordance
with Section 3.5 of the Indenture.
-2-
<PAGE>
ELECTION
The undersigned holder (the "Selling Securityholder") of Registrable
Securities hereby elects to include in the Shelf Registration Statement the
Registrable Securities beneficially owned by it and listed below in Item (3)
(unless otherwise specified under Item (3). The undersigned, by signing and
returning this Notice and Questionnaire, agrees to be bound with respect to such
Registrable Securities by the terms and conditions of this Notice and
Questionnaire and the Registration Rights Agreement, including, without
limitation, Section 5 of the Registration Rights Agreement, as if the
undersigned Selling Securityholder were an original party thereto.
Upon any sale of Registrable Securities pursuant to the Shelf Registration
Statement, the undersigned Selling Securityholder will be required to deliver to
the Company and the Trustee under the Indenture the Notice of Transfer completed
and signed set forth in Appendix I to the Notice and Questionnaire and hereby
undertakes to do so.
The undersigned Selling Securityholder hereby provides the following
information to the Company and represents and warrants that such information is
accurate and complete:
<PAGE>
QUESTIONNAIRE
(1) (a) Full Legal Name of Selling Securityholder:
______________________________________________________________________
(b) Full Legal Name of Registered Holder (if not the same as in (a) above)
of Registrable Securities Listed in (3) Below:
______________________________________________________________________
(c) Full Legal Name of DTC Participant (if applicable and if not the same
as (b) above) Through Which Registrable Securities Listed in (3) Below
are Held:
______________________________________________________________________
(2) Address for Notices to Selling Securityholder:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
Telephone:_________________________________________________________________
Fax:_______________________________________________________________________
Contact:___________________________________________________________________
(3) Beneficial Ownership of Registrable Securities:
Except as set forth below, the undersigned Selling Securityholder does not
beneficially own any Notes or Common Stock previously issued upon
conversion or repurchase of any Note.
Principal amount of Notes beneficially owned:______________________________
Number of shares of Common Stock beneficially owned and issued to date upon
conversion or repurchase of Notes (if any):________________________________
Principal amount of Notes which the undersigned wishes to be included in
the Shelf Registration Statement:__________________________________________
-2-
<PAGE>
Number of shares of Common Stock (if any) issued upon conversion or
repurchase of Registrable Securities which are to be included in the Shelf
Registration Statement:___________
(4) Other shares of Common Stock or other Notes of the Company Owned by the
Selling Securityholder:
Except as set forth below, and under Item (3) above, the undersigned
Selling Securityholder is not the beneficial or registered owner of any
shares of Common Stock or any other securities of the Company.
State any exceptions here:
(5) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any of
its affiliates, officers, directors or principal equity holders (5% or
more) has held any position or office or has had any other material
relationship with the Company (or its predecessors or affiliates) during
the past three years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder intends
to distribute the Registrable Securities listed above in Item (3) only as
follows (if at all): Such Registrable Securities may be sold from time to
time directly by the undersigned Selling Securityholder or, alternatively,
through underwriters, broker-dealer or agents. Such Registrable Securities
may be sold in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time
of sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve crosses or block transactions) (i) on any
national securities exchanges or U.S. inter-dealer quotation system of a
registered national securities association on which the Registrable
Securities may be listed or quoted at the time of sale, (ii) in the over-
the-counter market, (iii) in transactions otherwise than on such exchanges
or services or in the over-the-counter market, or (iv) through the writing
of options. In connection with sales of the Registrable Securities or
otherwise, the Selling Securityholder may enter into hedging transactions
with broker-dealers, which may in turn engage in short sales of the
Registrable Securities in the course of hedging the positions they assume.
The Selling Securityholder may also sell Registrable Securities short and
deliver Registrable Securities to close out such short position, or loan or
pledge Registrable Securities to broker-dealers that in turn may sell such
securities.
-3-
<PAGE>
State any exceptions here:
Note: In no event may such method(s) of distribution take the form of an
underwritten offering of the Registrable Securities without the prior
agreement of the Company.
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with
the prospectus delivery and other provisions of the Securities Act and
Exchange Act and the respective rules thereunder, particularly Regulation
M.
In the event that the Selling Securityholder transfers all or any portion
of the Registrable Securities listed in Item (3) above after the date on
which such information is provided to the Company, the Selling
Securityholder agrees to notify the transferee(s) at the time of the
transfer of its rights and obligations under this Notice and Questionnaire
and the Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the disclosure of
the information contained herein in its answers to Items (1) through (6)
above and the inclusion of such information in the Shelf Registration
Statement and related Prospectus. The Selling Securityholder understands
that such information will be relied upon by the Company in connection with
the preparation of the Shelf Registration Statement and related Prospectus.
In accordance with the Selling Securityholder's obligation under the
Registration Rights Agreement to provide such information as may be
required by law for inclusion in the Self Registration Statement, the
Selling Securityholder agrees to promptly notify the Company of any
inaccuracies or changes in the information provided herein which may occur
subsequent to the date hereof at any time while the Self Registration
Statement remains in effect. All notices hereunder and pursuant to the
Registration Rights Agreement shall be made in writing by hand delivery,
first-class mail, or air courier guaranteeing overnight delivery as
follows:
To the Company:
BEA Systems, Inc.
385 Moffett Park Drive
Sunnyvale, CA 94089
Attention: Secretary
Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by the Company, the terms of this Notice and
Questionnaire, and the representations and warranties contained herein,
shall be binding on, shall inure to the benefit of and shall be enforceable
by the respective successors, heirs, personal representatives and assigns
of the Company and the Selling Securityholder with respect to the
Registrable Securities
-4-
<PAGE>
beneficially owned by such Selling Securityholder and listed in Item (3)
above. This Agreement shall be governed in all respects by the laws of the
State of New York.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.
Dated:______________________________________
______________________________________
Selling Securityholder
(Print/type full legal name of beneficial owner of Registrable Securities)
By: __________________________________
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE (DEADLINE FOR RESPONSE) TO THE COMPANY AT:
BEA Systems, Inc.
385 Moffett Park Drive
Sunnyvale, CA 94089
Attention: Secretary
-5-
<PAGE>
APPENDIX I
NOTICE TO TRANSFER PURSUANT TO REGISTRATION STATEMENT
State Street Bank and Trust Company
of California, N.A.
633 W. Fifth Street, 12th Floor
Los Angeles, CA 90071
BEA Systems, Inc.
385 Moffett Park Drive
Sunnyvale, CA 94089
Attention: Secretary
Re: BEA Systems, Inc. 4% Convertible Subordinated Notes
due June 15, 2005 (the "Notes")
Dear Sirs:
Please be advised that _________________________________ has transferred
$_____ aggregate principal amount of the above-referenced notes or ______ shares
of the Company's Common Stock, issued on conversion, repurchase or redemption of
Notes, pursuant to the Registration Statement Form S-3 (File No. 333-_________)
filed by the Company.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied with respect to the
transfer described above and that the above-named beneficial owner of the Notes
of Common Stock is named as a selling security holder in the Prospectus dated
____________ or in amendments or supplements thereto, and that the aggregate
principal amount of the Notes of number of Common Stock transferred are [a
portion of] the Notes or Common Stock listed in such Prospectus as amended or
supplemented opposite such owner's name.
Dated:______________________________
Very truly yours,
______________________________
(Name)
By: ______________________________
(Authorized Signature)
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF MORRISON & FOERSTER LLP]
September 9, 1998
BEA Systems, Inc.
2315 North First Street
San Jose, CA 95131
Re: 4% Convertible Notes Due June 15, 2005
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to BEA Systems, Inc., a Delaware corporation (the
"Company"), in connection with the Registration Statement (the "Registration
Statement") on Form S-3 under the Securities Act of 1933, as amended, for the
registration and resale of an aggregate of $250,000,000 principal amount of 4%
Convertible Notes due June 15, 2005 (the "Notes") and 9,467,450 shares of the
common stock, par value $.001 per share of the Company issuable upon conversion
of the Notes (the "Shares") being offered by certain selling securityholders
specified therein (the "Selling Securityholders"). The Notes will be issued
pursuant to the terms and conditions of, and in the forms set forth in, an
indenture dated as of June 1, 1998 (the "Indenture") between the Company and
State Street Bank and Trust Company of California, N.A., as trustee (the
"Trustee"). The form of the Indenture has been filed as an exhibit to the
Registration Statement.
We have examined originals or copies of the Indenture and the Notes. In
addition, we have examined such records, documents, certificates of public
officials and of the Company, made such inquiries of officials of the Company,
and considered such questions of law as we have deemed necessary for the purpose
of rendering the opinions set forth herein. As counsel to the Company, we have
examined the proceedings taken by the Company and the Selling Securityholders in
connection with the sale by the Selling Securityholders of up to $250,000,000 of
Notes and up to 9,467,450 shares of Stock.
We have assumed the genuineness of all signatures, the authenticity of all
Notes submitted to us as originals and the conformity with originals of all
items submitted to us as copies. We have also assumed that each party to the
Indenture and the Notes, other than the Company, has the power and authority to
execute and deliver, and to perform and observe the provisions of, the Indenture
and the Notes, and has duly authorized, executed and delivered the Indenture and
the Notes, that the Indenture constitutes the legal, valid and binding
obligations of the Trustee, and that the Indenture has been duly authenticated
by the Trustee and will be duly qualified under the Trust
<PAGE>
MORRISON & FOERSTER LLP
BEA Systems, Inc.
September 9, 1998
Page Two
Indenture Act of 1939, as amended. We have also assumed compliance with all
applicable state securities and "Blue Sky" laws.
The opinions hereinafter expressed are subject to the following further
qualifications and exceptions:
(i) The effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, including, without limitation, laws relating to
fraudulent transfers or conveyances, preferences and equitable subordination;
(ii) Limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the
Notes and the Indenture; and the effect of judicial decisions which have held
that certain provisions are unenforceable where their enforcement would
violate the implied covenants of good faith and fair dealing, or would be
commercially unreasonable, or where their breach is not material;
(iii) We express no opinion as the effect on the opinions expressed
herein of (a) the compliance or non-compliance of any party to the Indenture
or the Notes (other than the Company) with any laws or regulations applicable
to it, or (b) the legal or regulatory status or the nature of the business of
any such party;
(iv) The effect of judicial decisions which may permit the
introduction of extrinsic evidence to supplement the terms of the Indenture or
the Notes or to aid in the interpretation of the Indenture or the Notes;
(v) We express no opinion as to the enforceability of provisions of
the Indenture or the Notes imposing, or which are construed as effectively
imposing, penalties;
(vi) The enforceability of provisions of the Indenture or the Notes
which purport to establish evidentiary standards or to make determinations
conclusive; and
(vii) We express no opinion as to the enforceability of any choice of
law provisions contained in the Indenture or the Notes or the enforceability
of any provisions which purport to establish a particular court as the forum
for adjudication of any controversy relating to the Indenture or the Notes or
which purport to cause any party to waive or alter any right to a trial by
jury or which waive objection to jurisdiction.
<PAGE>
MORRISON & FOERSTER LLP
BEA Systems, Inc.
September 9, 1998
Page Three
Based upon and subject to the foregoing, we are of the following opinions:
(1) The Notes, assuming due authentication of the Notes by the Trustee,
constitute valid and binding obligations of the Company; and
(2) The Notes and the Stock that may be sold are legally and validly
issued, fully paid and nonassessable.
We express no opinion as to matters governed by laws of any jurisdiction
other than the following as in effect on the date hereof: the substantive laws
of the State of New York and Delaware (without reference to the choice of law
rules of either state) and the federal laws of the United States of America.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us in the Registration
Statement, the prospectus constituting a part thereof and any amendments
thereto.
Very truly yours,
/s/ Morrison & Foerster LLP
____________________________________
Morrison & Foerster LLP
<PAGE>
EXHIBIT 12.1
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Three months ended Fiscal years ended
April 30, January 31,
------------------ ---------------------------
1998 1997 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of net earnings (loss) before fixed
charges to fixed charges 1.87:1 (6.79):1 (1.19):1 (8.95):1 (75.76):1
====== ======== ======== ======== ========
</TABLE>
EXHIBIT 12.1
The Company's ratio of earnings to fixed charges for each of the periods
indicated is as follows (in thousands):
<TABLE>
<CAPTION>
Three months ended Fiscal years ended
April 30, January 31,
------------------ ---------------------------
1998 1997 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net earnings (loss) $1,572 $(20,069) $(18,149) $(86,916) $(17,680)
Fixed charges:
Interest expenses 1,296 1,965 6,054 6,727 89
Portion of rent expense deemed to represent
interest factor 512 344 1,958 1,125 83
Interest expense - 268 268 880 58
------ -------- -------- -------- --------
Total fixed charges 1,808 2,577 8,280 8,732 230
------ -------- -------- -------- --------
Net earnings (loss) before fixed charges $3,380 $(17,492) $ (9,869) $(78,184) $(17,450)
====== ======== ======== ======== ========
Deficiency of net earnings to cover
fixed charges N/A $ 20,069 $18,149 $86,916 $ 17,680
====== ======== ======== ======== ========
</TABLE>
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of BEA Systems,
Inc. for the registration of $250,000,000 of 4% Convertible Subordinated Notes
due June 15, 2005 and 9,467,450 shares of its common stock and to the
incorporation by reference therein of our report dated February 24, 1998, with
respect to the consolidated financial statements of BEA Systems, Inc. included
in its Annual Report (Form 10-KSB) for the year ended January 31, 1998, filed
with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
______________________________
Palo Alto, California
September 8, 1998
<PAGE>
Exhibit 25.1
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) [X]
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
United States 06-1143380
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
633 West 5th Street, 12th Floor, Los Angeles, California 90071
(Address of principal executive offices) (Zip Code)
Lynda A. Vogel, Senior Vice President and Managing Director
633 West 5th Street, 12th Floor, Los Angeles, California 90071
(213) 362-7399
(Name, address and telephone number of agent for service)
BEA SYSTEMS, INC.
(Exact name of obligor as specified in its charter)
Delaware 77-0394711
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
385 Moffett Park Drive
Sunnyvale, CA 94089-1208
(Address of principal executive offices) (Zip Code)
Convertible Subordinated Notes due 2005
(TYPE OF SECURITIES)
<PAGE>
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Comptroller of the Currency, Western District Office, 50
Fremont Street, Suite 3900, San Francisco, California, 94105-2292
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Bank and Trust Company.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange Commission as
Exhibits with corresponding exhibit numbers to the Form T-1of Western
Digital Corporation, filed pursuant to Section 305(b)(2) of the Act, on
May 12, 1998 (Registration No. 333-52463), and are incorporated herein
by reference.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A Certificate of Corporate Existence (with fiduciary powers)
from the Comptroller of the Currency, Administrator of National Banks
is on file with the Securities and Exchange Commission as Exhibits with
corresponding exhibit numbers to the Form T-1 of Western Digital
Corporation, filed pursuant to Section 305(b)(2) of the Act, on May 12,
1998 (Registration No. 333-52463), and are incorporated herein by
reference.
3. A copy of the authorization of the trustee to exercise
corporate trust powers, if such authorization is not contained in the
documents specified in paragraph (1) or (2), above.
Authorization of the Trustee to exercise fiduciary powers
(included in Exhibits 1 and 2; no separate instrument).
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibits with
corresponding exhibit numbers to the Form T-1 of Western Digital
Corporation, filed pursuant to Section 305(b)(2) of the Act, on May 12,
1998 (Registration No. 333-52463), and are incorporated herein by
reference.
1
<PAGE>
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of the Act is
annexed hereto as Exhibit 6 and made a part hereof.
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.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company of California,
National 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 Los
Angeles, and State of California, on the 8th of September, 1998.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, NATIONAL ASSOCIATION
By: /s/ Mark Henson
---------------------------------
MARK HENSON
ASSISTANT VICE PRESIDENT
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by BEA SYSTEMS,
INC. of its CONVERTIBLE SUBORDINATED NOTES DUE 2005, we hereby consent that
reports of examination by Federal, State, Territorial or District authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, NATIONAL ASSOCIATION
By: /s/ Mark Henson
---------------------------------
MARK HENSON
ASSISTANT VICE PRESIDENT
DATED: SEPTEMBER 8, 1998
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<PAGE>
EXHIBIT 7
Consolidated Report of Condition and Income for A Bank With Domestic Offices
Only and Total Assets of Less Than $100 Million of State Street Bank and Trust
Company of California, a national banking association duly organized and
existing under and by virtue of the laws of the United States of America, at the
close of business June 30, 1998, published in accordance with a call made by the
-------------
Federal Deposit Insurance Corporation pursuant to the required law: 12 U.S.C.
Section 324 (State member banks); 12 U.S.C. Section 1817 (State nonmember
banks); and 12 U.S.C. Section 161 (National banks).
<TABLE>
<CAPTION>
Thousands
ASSETS of Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin................. 4,887
Interest-bearing balances.......................................... 0
Securities.............................................................. 38
Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and its Edge subsidiary..... 0
Loans and lease financing receivables:
Loans and leases, net of unearned income .................. 0
Allowance for loan and lease losses ....................... 0
Allocated transfer risk reserve............................ 0
Loans and leases, net of unearned income and allowances ........... 0
Assets held in trading accounts......................................... 0
Premises and fixed assets............................................... 55
Other real estate owned................................................. 0
Investments in unconsolidated subsidiaries.............................. 0
Customers' liability to this bank on acceptances outstanding............ 0
Intangible assets....................................................... 0
Other assets............................................................ 881
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Total assets............................................................ 5,861
=======
LIABILITIES
Deposits:
In domestic offices................................................ 0
Noninterest-bearing ................................. 0
Interest-bearing .................................... 0
In foreign offices and Edge subsidiary............................. 0
Noninterest-bearing ................................. 0
Interest-bearing .................................... 0
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary ............................... 0
Demand notes issued to the U.S. Treasury and Trading Liabilities........ 0
Other borrowed money.................................................... 0
Subordinated notes and debentures....................................... 0
Bank's liability on acceptances executed and outstanding................ 0
Other liabilities....................................................... 2,117
Total liabilities....................................................... 2,117
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EQUITY CAPITAL
Perpetual preferred stock and related surplus........................... 0
Common stock............................................................ 500
Surplus................................................................. 750
Undivided profits and capital reserves/Net unrealized holding gains
(losses)........................................................... 2,494
Cumulative foreign currency translation adjustments..................... 0
Total equity capital.................................................... 3,744
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Total liabilities and equity capital.................................... 5,861
=======
</TABLE>
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<PAGE>
I, Kevin R. Wallace, Vice President and Comptroller of the above named bank do
hereby declare that this Report of Condition and Income for this report date
have been prepared in conformance with the instructions issued by the
appropriate Federal regulatory authority and is true to the best of my knowledge
and belief.
Kevin R. Wallace
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
Lynda A. Vogel
James A. Quale
Stephen Rivero
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