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As filed with the Securities and Exchange Commission on March 13, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BEA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
Delaware 77-0394711
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
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2315 North First Street
San Jose, California 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, California 95131
(408) 570-8000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
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. [_]
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CALCULATION OF REGISTRATION FEE
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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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4% Convertible Notes due December 15, 2006 $550,000,000 100% $550,000,000 $145,200
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Common Stock, $.001 par value...................... 7,936,500 Shares $ (2) $ (2) $ (2)
================================================================================================================================
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(1) The amount of shares of Common Stock to be registered hereunder which is to
be sold by certain selling securityholders consists of 3,968,250 shares of
Common Stock issuable upon conversion of the 4% Convertible Notes due
December 15, 2006 (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 14.43
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.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission Subject to Completion, dated March 13, 2000
is effective. This prospectus is not an offer to sell these securities and is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated March 13, 2000
PROSPECTUS
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BEA Systems, Inc.
$550,000,000 of 4% Convertible Subordinated Notes Due December 15, 2006
7,936,500 Shares of Common Stock
This prospectus relates to the offering for resale by selling
securityholders listed on page 18 of up to an aggregate of $550,000,000 of 4%
Convertible Subordinated Notes due December 15, 2006 of BEA Systems, Inc., a
Delaware corporation, and up to 7,936,500 shares of Common Stock, par value
$.001 per share, that are issuable upon conversion of the notes at the
conversion rate of 14.43 shares per $1,000 principal amount of notes, which
conversion rate was adjusted on December 19, 1999 to reflect the Company's two-
for-one stock split effected on such date. The notes offered hereby were
originally offered by the company in a private placement.
You may convert the notes into shares of common stock of BEA at any time
before their maturity or their prior redemption or repurchase by us. The notes
will mature on December 15, 2006. The conversion rate is 14.43 shares per each
$1,000 principal amount of notes, subject to adjustment in certain
circumstances. This is equivalent to a conversion price of approximately $69.30
per share. On March 10, 2000, the last reported bid price for the common stock
on the Nasdaq National Market was $134.00 per share. The common stock is listed
under the symbol "BEAS".
See "Recent Events" for a discussion of our recently announced two-for-one
stock split. This split is in addition to the split discussed above and is
subject to stockholder approval of an amendment to our articles of incorporation
to increase our authorized common stock in order to effect the split. The share
amounts and related share information in this offering circular do not give
effect to this split.
BEA will pay interest on the notes on June 15 and December 15 of each year.
The first interest payment will be made on June 15, 2000. The notes are our
unsecured obligations, subordinated in right of payment to our present and
future senior debt, as described in this offering circular, and effectively
subordinated in right of payment to all indebtedness and other liabilities of
our subsidiaries. As of October 31, 1999, the aggregate amount of our
outstanding senior debt was approximately $46 million, and the aggregate amount
of indebtedness and other liabilities of our subsidiaries was approximately $55
million (excluding intercompany liabilities).
On or after December 20, 2002, BEA has the option to redeem all or a
portion of the notes, which have not previously been converted, at the
redemption prices described in this prospectus, provided that BEA may only
redeem all or a portion of the notes on or after December 20, 2002 and before
December 15, 2004 if the closing price of our common stock is at least 140% of
the conversion price for a specified period of time before the notes are
redeemed. Purchasers of the notes have the option, subject to certain
conditions, to require BEA to repurchase any notes held by them in the event of
a "Change in Control", as described in this prospectus, at a price equal to 100%
of the principal amount of the notes plus accrued interest to the date of
repurchase. We may pay the repurchase price in cash or, subject to certain
conditions, in our common stock.
Investing in our notes and common stock involves risks. See "Risk Factors"
beginning on page 9 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. 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."
We will not receive any of the proceeds from the sale of notes or shares by
the selling securityholders but have agreed to bear certain expenses of
registration of the notes and 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 notes or
shares may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended, and any commissions received by them and any profit on
the resale of the notes or shares may be deemed to be underwriting commissions
or discounts under the Securities Act of 1933.
The date of this Prospectus is __, 2000
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TABLE OF CONTENTS
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Page
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Available Information............................................... 3
Incorporation of Certain Documents by Reference..................... 3
The Company......................................................... 5
Recent Events....................................................... 7
Use of Proceeds..................................................... 7
Ratio of Earnings to Fixed Charges.................................. 8
Risk Factors........................................................ 9
Special Note Regarding Forward-Looking Statements................... 17
Selling Securityholders............................................. 18
Description of Notes................................................ 22
Plan of Distribution................................................ 35
Experts............................................................. 35
Legal Matters....................................................... 35
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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
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance these
requirements we file reports, proxy statements and other information with the
Securities and Exchange Commission. These 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 these materials 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 ours, that file electronically with
the Commission. In addition, the Common Stock is listed on the Nasdaq National
Market and similar information concerning us can be inspected and copied at the
offices of the National Association of Securities Dealers, Inc., 9513 Key West
Avenue, Rockville, Maryland 20850.
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3 (of which this prospectus is a part) under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the notes and
shares. This prospectus does not contain all of the information set forth in the
registration statement, portions of which have been omitted as permitted by the
rules and regulations of the Securities and Exchange 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 BEA Systems, Inc. and the notes and shares, reference is hereby made
to the registration statement and the exhibits and schedules which may be
obtained from the Securities and Exchange Commission at its principal office in
Washington, D.C. upon payment of the fees prescribed by the Securities and
Exchange Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by BEA Systems, Inc. under the
Securities Exchange Act of 1934 with the Securities and Exchange Commission and
are incorporated herein by reference:
a. Our Annual Report on Form 10-K for the year ended January 31, 1999;
b. Our Quarterly Reports on Form 10-Q for the quarters ended April 30,
1999, July 31, 1999, and October 31, 1999;
c. Our Current Reports on Form 8-K filed on December 6, 1999 and December
13, 1999, as amended January 18, 2000; and
d. The description of our Common Stock contained in our registration
statement on Form 8-A (File No. 000-22369).
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Each document filed by BEA Systems, Inc. pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934 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 these 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 these documents, 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, Vice President - Investor Relations, 2315 North First Street, San
Jose, California 95131, telephone number: (408) 570-8000.
4
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THE COMPANY
Overview
We are a leading provider of e-commerce infrastructure software that helps
companies of all sizes build e-commerce systems that extend investments in
existing computer systems and provide the foundation for running a successful
integrated e-business. Our vision is to become the leading provider of
architecture and software infrastructure solutions for development and
deployment of reliable, scalable business applications for e-commerce.
Our core business has been providing infrastructure for high-volume
transaction systems, such as telecommunications billing applications, commercial
bank ATM networks and account management systems, credit card billing systems
and securities trading account management systems. These distributed systems
must scale to process high transaction volumes and accommodate large numbers of
users. As the Internet and e-commerce continue to develop, increasing
transaction loads are being placed on Web-based systems, such as retail e-
commerce sites. In addition, systems that historically have been strictly
internal are now being extended to the Internet, such as telecommunications,
bank and credit card account information. As the number and complexity of
transactions being processed by e-commerce systems grows, developers of high-
volume transaction Web sites have increasingly turned to our reliable, scalable,
end-to-end e-commerce solutions. With the extension of our BEA Tuxedo product
to e-commerce systems, increased adoption of WebLogic, and our recent
acquisition of The Theory Center, we are well positioned to meet the needs of
companies who require scalable and reliable e-commerce systems.
An e-commerce transaction involves much more than simply the purchase of an
item over the Web. In order to perform a single e-business transaction, a
robust e-commerce system must process several distinct computer transactions. A
typical e-commerce request, whether a purchase or an information search,
generates a series of interconnected computer transactions. These computer
transactions may include determining whether the ordered item is in stock,
determining where the item is located, scheduling the item for shipping,
processing payment and recording the transaction in the company's financial
records. In addition, many Web sites now gather information about users as they
navigate the site. This information is stored, identified with the particular
user, and compared with past behavior of the same and other users in order to
personalize online interaction by recommending specific merchandise, offering
personalized pricing and displaying targeted advertising, all based on the
user's profile. As e-commerce grows, an increasing number of e-business
transactions generates increasing numbers of computer transactions, driving the
demand for more scalable and reliable systems for managing them.
We provide an e-commerce transaction platform that is designed to address
this demand and help companies quickly develop and integrate e-business
initiatives and reliably deliver a wider range of dynamic, personalized
services.
Our products are marketed and sold worldwide through a network of sales
offices, as well as hardware vendors, independent software vendors and systems
integration companies that are BEA distribution partners and software
distributors. Licenses for our products are typically priced on a per-user,
per-application basis, but we also offer licenses priced per server CPU and
time-based enterprise licenses.
Products and Services
Our products and professional services together provide an end-to-end
transaction platform for developing and deploying e-commerce applications that
extend investments in existing computer systems. These products and services
are packaged as the BEA E-Commerce Transaction Platform(TM). The BEA E-Commerce
Transaction Platform includes:
E-Commerce Server Software. We provide a family of Web and application
server software that enables scalable, reliable e-commerce applications. Our e-
commerce server software includes:
. BEA WebLogic Server(TM), an award-winning Java(TM) Web application
server software platform for e-commerce applications that uses
Enterprise JavaBeans (EJB) .
. BEA WebLogic Enterprise(TM), industrial-strength e-commerce server
software that leverages the BEA Tuxedo(R) code base and extends the
robust, high-volume transaction processing capabilities of BEA Tuxedo to
applications written in Common Object Request Broker Architecture
(CORBA) C++ and CORBA Java. In addition, we recently extended the
capabilities of BEA Tuxedo to applications written in EJB through a new
version of WebLogic Enterprise.
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. BEA Tuxedo, a leading application server software platform for building
and managing reliable high-transaction volume e-commerce and other
mission-critical applications in distributed environments.
All BEA application server software platforms are standards-compliant and
compatible with leading hardware, operating systems and databases. This enables
customers to extend their investments in existing computer systems and maintain
flexibility for future technology purchases.
E-Commerce Integration Software. We provide solutions for rapidly and
reliably integrating large-scale enterprise applications and business processes
both within an enterprise and across the Web with suppliers, distribution
partners and customers to accomplish strategic e-business initiatives.
BEA eLink(TM) is infrastructure software for integration of enterprise
applications. BEA eLink includes a robust and scalable integration server,
best-of-breed data integration and process management options, integration
components for leading databases, key customer relationship management (CRM) and
enterprise resource planning (ERP) applications. BEA eLink also includes a
broad set of mainframe adapters and an Extensible Markup Language (XML) adapter.
Integrated under a single interface, BEA eLink enables a variety of
packaged and proprietary applications to interact seamlessly across multiple
operating systems, standards, and programming languages. BEA eLink is built on
the BEA Tuxedo platform, and provides support for multiple synchronous and
asynchronous messaging formats, reliably processing transactions in high-volume,
highly distributed environments.
E-Commerce Application Components. We provide component-based products
that enable businesses to rapidly create adaptable e-commerce applications. To
sustain their competitive advantage, companies using the Web need to be able to
modify applications and implement new e-commerce initiatives quickly in response
to market changes, customer demands and competitive advances. To meet this
demand, we have introduced our new BEA Commerce Ready(TM) family of products
that provides businesses with the building blocks required to create robust
adaptable e-commerce applications. By providing ready-made application
functionality in these pre-built reusable components, BEA helps enable companies
to quickly create new Web-based applications. The first product in the family,
BEA Commerce Ready ComponentsTM, includes over 80 standard EJB components that
can be quickly assembled into adaptable, extensible and scalable e-commerce
solutions. Our recent acquisition of The Theory Center greatly enhanced the
number of components and the functionality offer by BEA. Components offered by
BEA provide business logic commonly used in e-commerce sites, such as shopping
cart, inventory management, order tracking, and pricing.
E-Commerce Services. We help bridge the gap between the need for companies
to get online quickly and our customers' lack of in-house expertise available to
make this transition. We provide accelerated design and delivery of e-commerce
solutions, 24x7 operations support, rapid knowledge transfer, and deep
experience with BEA platforms as well as legacy infrastructures. Our services
include:
. Customer support services. Our customer support can be scaled to meet a
variety of needs including around-the-clock support. We offer customer
support services through telephone, e-mail, BEA-sponsored electronic
bulletin boards and other channels. Our support personnel are located
throughout the world and provide on-site customer support as needed.
. Professional consulting services. We have significant expertise in
defining, architecting, building and deploying e-commerce solutions.
Professional consulting services are performed on-site as necessary and
also in our offices in the U.S. and Europe.
. BEA educational services. We offer formal training courses to educate
customers' developers in techniques for building e-commerce applications
using Web-optimized languages and technologies.
Customers and Partners
We have more than 3,500 worldwide customers for our products and services.
Our products and services have been chosen for e-commerce initiatives by
emerging Internet companies as well as established businesses. Traditional
companies are using our products and services to extend internal applications to
the Web, such as telecommunications billing, Internet banking securities
trading, online airline reservations, online inventory control, and online
monitoring and control of home appliances. Our products are used to support the
Web-based applications users see on their screens, as well as internal
applications that can now be accessed through the Web. Significant customers
our fiscal 2000 year include British Airways, British Telecom, Chase Manhattan
Bank, Deutsche Telekom, General Motors, Kaiser Permanente, MeritaNordbanken,
S.W.I.F.T., United Airlines, and Vattenfall. Significant Internet customers our
fiscal 2000 year include Amazon.com, Autoconnect, Beyond.com, E*Trade,
iAMnetworks.com, Intertainer, MetaMarkets.com, Planet(Rx),
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priceline.com, Sparks.com, Spendcash.com, Travelnow.com, and TRIP.com. Hardware
vendors such as Hewlett-Packard, Unisys, Bull Information Systems and NCR have
selected BEA application servers as the software infrastructure for their e-
commerce hardware solutions. BEA has also added relationships with systems
integrators, particularly Web enablement services companies iXL and Razorfish.
BEA has been adopted for Web-based applications by a large number of independent
application developers, including Calico, Cemax, Parametric Technologies,
PeopleSoft, Rubric, Six Degrees, and Tradex.
We were incorporated in Delaware in January 1995 under the name BEA
Enterprises, Inc. and changed our name to BEA Systems, Inc. in September 1995.
References to "BEA" or the "Company" refer to BEA Systems, Inc., our
subsidiaries and predecessor entities acquired in previous acquisitions. Our
headquarters are located at 2315 North First Street, San Jose, California,
95131. Our telephone number is (408) 570-8000.
RECENT EVENTS
Stock Split. We recently announced a two-for-one split of our common
stock, to be effected in the form of a stock dividend, payable on April 24, 2000
to stockholders of record on April 7, 2000. This split is subject to the
approval by our stockholders, at a special stockholders' meeting scheduled for
April 6, 2000, of an amendment to our Certificate of Incorporation to increase
our authorized common stock to an amount that would accommodate this stock
dividend. Share amounts and related share information in this Offering Circular
do not reflect this split, but do reflect our previous two-for-one split
effected in December 1999. The conversion rate applicable to the notes will be
adjusted to reflect the stock split.
Acquisition of The Theory Center. On November 19, 1999, pursuant to an
Agreement and Plan of Merger, dated as of November 10, 1999, we acquired The
Theory Center, Inc., a privately held Delaware corporation. As consideration
for the transaction, we issued 3,635,414 shares of our common stock in exchange
for the outstanding shares of capital stock of The Theory Center, subject to the
withholding of 10.5% of such shares in escrow in accordance with the terms of
the acquisition agreement. The 3,635,414 shares of our common stock issued in
consideration do not reflect our recently announced two-for-one stock split.
See "--Stock Split." At the effective time of the merger, all outstanding
options and warrants to purchase shares of The Theory Center common stock were
automatically converted into options and warrants to purchase our common stock
based upon the conversion factor set forth in the acquisition agreement with
corresponding adjustment to their respective exercise prices.
Recent Announcement. In December 1999, BEA and Warburg, Pincus Ventures,
LP formed a new independent company, WebGain, Inc., to bring to market software
tools that are designed to accelerate the development and deployment of
component-based applications for e-commerce. Warburg, Pincus Ventures, LP holds
the controlling share of WebGain, Inc., and BEA, together with employees of the
new company, hold the remaining interests. The first transaction by WebGain,
Inc. was the $75 million cash acquisition of the Visual Cafe product line of
Symantec Corporation's Internet Tools Division completed in December 1999.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of notes or
shares by the selling securityholders, but has agreed to bear certain expenses
of registration of the notes and shares under federal and state securities laws.
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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):
Ratio of Earnings to Fixed Charges
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Nine months ended
October 31, Fiscal years ended January 31,
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1999 1999 1998 1997
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Loss before income taxes.............................. $(39,724) $(46,726) $(20,068) $(87,034)
Add fixed charges..................................... 5,162 16,615 8,531 8,238
-------- -------- -------- --------
Earnings (as defined)................................. $(34,562) $(30,111) $(11,537) $(78,796)
======== ======== ======== ========
Fixed charges:
Interest expense.................................... 3,785 10,426 6,054 6,727
Portion of rent expense representative of interest.. 1,377 5,528 2,477 1,511
======== ======== ======== ========
Amortization of debt issuance costs................. -- 661 -- --
-------- -------- -------- --------
Total fixed charges.............................. $ 5,162 $ 16,615 $ 8,531 $ 8,238
======== ======== ======== ========
Ratio of earnings to fixed charges.................... * * * *
======== ======== ======== ========
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* Earnings (as defined) were insufficient to cover fixed charges by $39,724,
$46,726, $20,068 and $87,034 for the nine month period ended October 31, 1999
and the fiscal years ended January 31, 1999, 1998 and 1997, respectively.
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RISK FACTORS
Investors should carefully consider the following risk factors in
evaluating an investment in the common stock.
Significant unanticipated fluctuations in our quarterly revenues and operating
results may not meet securities analysts' or investors' expectations and result
in a decline in our stock price.
Although we have had significant revenue growth in recent quarters, our
growth rates may not be sustainable. If our revenues, operating results,
earnings or future projections are below the levels expected by securities
analysts, our stock price is likely to decline. Our stock price is also subject
to the volatility generally associated with Internet, software and technology
stocks and may also be affected by broader market trends unrelated to our
performance.
We expect to experience significant fluctuations in our future quarterly
revenues and operating results as a result of many factors, including:
. difficulty predicting the size and timing of customer orders
. introduction or enhancement of our products or our competitors' products
. general economic conditions, which can affect our customers' capital
investment levels and the length of our sales cycle
. any slowdown in use of the Internet for commerce
. recent hiring may prove excessive if growth rates are not maintained
. the structure, timing and integration of acquisitions of businesses,
products and technologies, including The Theory Center
. the terms and timing of financing activities
. continued market acceptance of our products
. the lengthy sales cycle for our products
. technological changes in computer systems and environments
. whether we are able to develop, introduce and market new products on a
timely basis
. changes in our competitors' product offerings and pricing policies, and
customer order deferrals in anticipation of new products and product
enhancements from BEA or competitors
. whether we are able to expand our sales and marketing programs
. the mix of our products and services sold and mix of distribution
channels
. whether we are able to meet our customers' service requirements
. costs associated with acquisitions, including the acquisition of The
Theory Center
. the impact and duration of deteriorated economic and political
conditions in Asia
. a widely-predicted freeze in deployment of new computer systems by large
corporations in the first quarter of 2000, related to remediation of the
Year 2000 problem
. loss of key personnel
. fluctuations in foreign currency exchange rates
. interpretations of the accounting pronouncements on software revenue
recognition.
As a result of all of these factors, we believe that quarterly revenues and
operating results are difficult to forecast and period-to-period comparisons of
our results of operations are not necessarily meaningful and should not be
relied upon as indications of trends or future performance.
An increasing portion of our revenues is derived from large orders as
customers deploy our products throughout their organizations or choose to
standardize on our products for their system architecture. Increases in the
dollar size of individual license transactions also increase the risk of
fluctuation in future quarterly results. If we cannot generate large customer
orders, or customers delay or cancel such orders in a particular quarter, it
will have a material adverse effect on our revenues and, more significantly on
a percentage basis, our net income or loss in that quarter. Moreover, we
typically receive and fulfill a majority of our orders within the quarter, with
the substantial majority of our orders received in the last month of each
fiscal quarter. As a result, we may not learn of revenue shortfalls until late
in a fiscal quarter, after it is too late to adjust expenses for that quarter.
Additionally, our operating expenses are based in part on our expectations for
future revenues and are relatively fixed in the short term. Any revenue
shortfall below our expectations could have an immediate and significant
adverse effect on our results of operations.
Our limited operating history and need to continue to integrate our
acquisitions makes it difficult to predict our future results
We were incorporated in January 1995 and therefore have a limited operating
history. We have generated revenues to date primarily from sales of BEA TUXEDO,
a software product to which we acquired worldwide distribution rights in
February 1996, and from fees for related software products and services. We
have also acquired a number of businesses, technologies and products, most
recently in November 1999 The Theory Center. Our limited operating history and
the need to integrate a number of separate and independent business operations
subject our business to numerous risks. At October 31, 1999, we had an
accumulated deficit of approximately $189 million. In addition, in connection
with certain acquisitions completed prior to October 31, 1999, we recorded
approximately $265 million as intangible assets. Under Generally Accepted
Accounting Principles, these intangible assets are required to be amortized in
future periods. Approximately $203 million of these assets have been amortized
as of October 31, 1999 and we expect to amortize the remaining approximately
$63 million in future periods through our fiscal year ending January 31, 2003.
We expect to amortize $11 million of such intangible assets over the remaining
quarter of the fiscal year ending January 31, 2000 and $39 million in the
fiscal year ending January 31, 2001. A substantial portion of the $100 million
purchase price for The Theory Center will be recorded as intangible assets and
amortized in the fiscal year ended January 31, 2001 and over future periods. If
we acquire additional businesses, products and technologies in the future, we
may report additional, potentially significant expenses. If future events cause
the impairment of any intangible assets acquired in our past or future
acquisitions, we may have to write off expenses sooner than we expect. Because
of our limited operating history and ongoing write-offs associated with our
prior acquisitions, there can be no assurance that we will be profitable in any
future period and recent operating results should not be considered indicative
of future financial performance.
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revenues and, more significantly on a percentage basis, our net income or loss
in that quarter. Moreover, we typically receive and fulfill a majority of our
orders within the quarter, with the substantial majority of our orders received
in the last month of each fiscal quarter. As a result, we may not learn of
revenue shortfalls until late in a fiscal quarter, after it is too late to
adjust expenses for that quarter. Additionally, our operating expenses are based
in part on our expectations for future revenues and are relatively fixed in the
short term. Any revenue shortfall below our expectations could have an immediate
and significant adverse effect on our results of operations.
Our limited operating history and need to continue to integrate our acquisitions
makes it difficult to predict our future results
We were incorporated in January 1995 and therefore have a limited operating
history. We have generated revenues to date primarily from sales of BEA TUXEDO,
a software product to which we acquired worldwide distribution rights in
February 1996, and from fees for related software products and services. We have
also acquired a number of businesses, technologies and products. Our limited
operating history and the need to integrate a number of separate and independent
business operations subject our business to numerous risks. At October 31, 1999,
we had an accumulated deficit of approximately $189.1 million. In addition, in
connection with certain acquisitions completed prior to October 31, 1999, we
recorded approximately $265.5 million as intangible assets. Under Generally
Accepted Accounting Principles, these intangible assets are required to be
amortized in future periods. Approximately $202.9 million of these assets have
been amortized as of October 31, 1999 and we expect to amortize the remaining
approximately $62.6 million in future periods through our fiscal year ending
January 31, 2003. We expect to amortize $11.0 million of such intangible assets
over the remaining quarter of the fiscal year ending January 31, 2000 and $39.0
million in the fiscal year ended January 31, 2001. If we acquire additional
businesses, products and technologies in the future, we may report additional,
potentially significant expenses. If future events cause the impairment of any
intangible assets acquired in our past or future acquisitions, we may have to
write off expenses sooner than we expect. Because of our limited operating
history and ongoing write-offs associated with our prior acquisitions, there can
be no assurance that we will be profitable in any future period and recent
operating results should not be considered indicative of future financial
performance.
If we cannot successfully integrate our past and future acquisitions, our
revenues may decline and expenses may increase
From our inception in January 1995, we have made several strategic
acquisitions. Integration of acquired companies, divisions and products involves
the assimilation of potentially conflicting operations and products, which
divert the attention of our management team and may have a material adverse
effect on our operating results in future quarters. We acquired Leader Group,
Inc. ("Leader Group") and a business unit of Penta Systems Technology, Inc.
("Penta") in the quarter ended April 30, 1998, NCR's TOP END technology in June
1998, the Entersoft Systems Corporation ("Entersoft") in July 1998, WebLogic,
Inc. ("WebLogic") in September 1998, Component Systems, LLC in May 1999,
Technology Resource Group, Inc. ("TRG") in July 1999, Avitek, Inc. ("Avitek") in
August 1999 and The Theory Center ("TTC") in November 1999. While we intend to
make additional acquisitions in the future, there may not be suitable companies,
divisions or products available for acquisition. Our acquisitions entail
numerous risks, including the risk we will not successfully assimilate the
acquired operations and products, or retain key employees of the acquired
operations. There are also risks relating to the diversion of our management's
attention, and difficulties and uncertainties in our ability to maintain the key
business relationships the acquired entities have established. In addition, if
we undertake future acquisitions, we may issue dilutive securities, assume or
incur additional debt obligations, incur large one-time expenses, and acquire
intangible assets that would result in significant future amortization expense.
Any of these events could have a material adverse effect on our business,
operating results and financial condition.
Recently, the Financial Accounting Standards Board ("FASB") voted to
eliminate pooling of interests accounting for acquisitions and the ability to
write-off in-process research and development has been limited by recent
pronouncements. The effect of these changes would be to increase the portion of
the purchase price for any future acquisitions that must be charged to the
Company's cost of revenues and operating expenses in the periods following any
such acquisitions. As a consequence, the Company's results of operations in
periods following any such acquisitions could be materially adversely affected.
Although these changes would not directly affect the purchase price for any of
these acquisitions, they would have the effect of increasing the reported
expenses associated with any of these acquisitions. To that extent, these
changes may make it more difficult for the Company to acquire other companies,
product lines or technologies.
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The price of our common stock and our notes may fluctuate significantly
The market price for our common stock and, in turn, the market price of the
notes, may be affected by a number of factors, including developments in the
Internet or software industry, general market conditions and other factors,
including factors unrelated to our operating performance or our competitors'
operating performance. In addition, stock prices for BEA and many other
companies in the Internet, technology and emerging growth sectors have
experienced wide fluctuations including recent rapid rises in their stock
prices, that have often been unrelated to the operating performance of such
companies. Such factors and fluctuations, as well as general economic,
political and market conditions, such as recessions, may materially adversely
affect the market price of our common stock and, in turn, the market price of
the notes.
If we cannot successfully integrate our past and future acquisitions, our
revenues may decline and expenses may increase
From our inception in January 1995, we have made several strategic
acquisitions. Integration of acquired companies, divisions and products
involves the assimilation of potentially conflicting operations and products,
which divert the attention of our management team and may have a material
adverse effect on our operating results in future quarters. We acquired Leader
Group, Inc. ("Leader Group") and a business unit of Penta Systems Technology,
Inc. ("Penta") in the quarter ended April 30, 1998, NCR's TOP END technology in
June 1998, the Entersoft Systems Corporation ("Entersoft") in July 1998,
WebLogic, Inc. ("WebLogic") in September 1998, Component Systems, LLC in May
1999, Technology Resource Group, Inc. ("TRG") in July 1999, Avitek, Inc.
("Avitek") in August 1999, and The Theory Center ("TTC") in November 1999. In
addition we and Warburg recently formed an independent company, WebGain, Inc. We
and WebGain, Inc. purchased in December 1999 from Symantec Corporation its
Visual Cafe product line. It is possible we may not achieve any of the intended
financial or strategic benefits of this transaction. While we intend to make
additional acquisitions in the future, there may not be suitable companies,
divisions or products available for acquisition. Our acquisitions entail
numerous risks, including the risk we will not successfully assimilate the
acquired operations and products, or retain key employees of the acquired
operations. There are also risks relating to the diversion of our management's
attention, and difficulties and uncertainties in our ability to maintain the key
business relationships the acquired entities have established. In addition, if
we undertake future acquisitions, we may issue dilutive securities, assume or
incur additional debt obligations, incur large one-time expenses, and acquire
intangible assets that would result in significant future amortization expense.
Any of these events could have a material adverse effect on our business,
operating results and financial condition.
Recently, the Financial Accounting Standards Board ("FASB") voted to
eliminate pooling of interests accounting for acquisitions and the ability to
write-off in-process research and development has been limited by recent
pronouncements. The effect of these changes would be to increase the portion of
the purchase price for any future acquisitions that must be charged to BEA's
cost of revenues and operating expenses in the periods following any such
acquisitions. As a consequence, our results of operations in periods following
any such acquisitions could be materially adversely affected. Although these
changes would not directly affect the purchase price for any of these
acquisitions, they would have the effect of increasing the reported expenses
associated with any of these acquisitions. To that extent, these changes may
make it more difficult for us to acquire other companies, product lines or
technologies.
Our revenues are derived primarily from two main product and services lines,
and a decline in demand or prices for either could substantially adversely
affect our operating results
We currently derive the majority of our license and service revenues from BEA
TUXEDO and BEA WebLogic and from related products and services. Although we
expect these products and
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services to continue to account for the majority of our revenues in the
immediate future, we believe that BEA WebLogic will become an increasingly
important revenue source. As a result, factors adversely affecting the pricing
of or demand for BEA TUXEDO and BEA WebLogic, such as competition, product
performance or technological change, could have a material adverse effect on
our business and consolidated results of operations and financial condition.
The lengthy sales cycle for our products makes our revenues susceptible to
substantial fluctuations
Our customers typically use our products to implement large, sophisticated
applications that are critical to their business, and their purchases are often
part of their implementation of a distributed or Web-based computing
environment. Customers evaluating our 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 our products is lengthy and is
subject to delays or cancellation over which we have little or no control. We
have experienced a significant increase in the number of million and multi-
million dollar license transactions. In some cases, this has resulted in more
extended customer evaluation and procurement processes, which in turn have
lengthened the overall sales cycle for our products. Moreover during the second
half of fiscal 1999, an increasing number of our customers began negotiating
licenses to use our enterprise application solutions as an architectural
platform for several applications. These architectural commitments are larger
in scope and potential revenue than single application transactions. In some
cases, these architectural commitments also have longer sales cycles than our
typical single application transactions, because of both the customer's
decision cycle in adopting an architectural platform and heightened corporate
approval requirements for larger contracts. We believe general economic
conditions that impact customers' capital investment decisions also affect our
sales cycles.
In addition, industry sources predict that many corporations will stop
deploying new computer systems in early 2000, in order to avoid
disrupting their computer systems before the Year 2000. We have been informed
by some of our customers that they intend to freeze deploying new computer
systems in early 2000. Furthermore, some of our customers may have accelerated
their purchases and deployments of our products in advance of these freezes.
These factors could cause an unusual fluctuation in our orders and if our
customers stop deploying new computer systems, our revenues could be materially
reduced and our operating results could be materially adversely affected,
especially in the first quarter of calendar 2000. Any significant change in
customer buying decisions or sales cycles for our products could have a material
adverse effect on our business, results of operations and financial condition.
Although we use a standard license agreement which meets the revenue
recognition criteria under current generally accepted accounting principles, we
must often negotiate and revise terms and conditions of this standard
agreement, particularly in larger license transactions. Negotiation of mutually
acceptable terms and conditions can extend the sales cycle and, in certain
situations, may require us to defer recognition of revenue on the license. In
addition, while we do not expect the Statement of Position 97-2, Software
Revenues Recognition, ("SOP 97-2") and SOP 98-4 and SOP 98-9, which amend
certain provisions of SOP 97-2, to have a material impact on our revenues and
earnings, detailed implementation guidelines of the standard have not yet been
issued. Once issued, such detailed guidance could lead to unanticipated changes
in our current revenue recognition practices and such changes could have an
adverse impact on revenues and earnings.
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If we do not effectively compete with new and existing competitors, our
revenues and operating margins will decline
The market for application server and integration software, and related
software components and services is highly competitive. Our competitors are
diverse and offer a variety of solutions directed at various segments of this
marketplace. These competitors include operating system vendors such as IBM,
Sun Microsystems and database vendors such as Oracle. Microsoft has released a
product that includes certain basic application server functionality and has
announced that it intends to include application server and integration
functionality in future versions of its operating systems, including Windows
2000. Oracle is the primary relational database vendor offering products that
are intended to serve as alternatives to our enterprise application server and
integration solutions. In addition, there are companies offering and developing
application server and integration software products and related services that
directly compete with products we offer. Further, software development tool
vendors typically emphasize the broad versatility of their toolsets and, in
some cases, offer complementary software that supports these tools and performs
basic application server and integration functions. Last, internal development
groups within prospective customers' organizations may develop software and
hardware systems that may substitute for those we offer. A number of our
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 us.
Our principal competitors currently include hardware vendors who bundle their
own application server and integration software products, or similar products,
with their computer systems and database vendors that advocate client/server
networks driven by the database server. IBM and Sun Microsystems are the
primary hardware vendors who offer a line of application server and integration
solutions for its customers. IBM's sale of application server and integration
functionality along with its IBM proprietary hardware systems requires us 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
application server and integration functionality with its proprietary hardware
and database systems. These inherent advantages allow IBM to bundle, at a
discounted price, application functionality with computer hardware and software
sales. Due to these factors, if we do not differentiate our products based on
functionality, interoperability with non-IBM systems, performance and
reliability, and establish our products as more effective solutions to
customers' needs our revenues and operating results will suffer.
Microsoft has announced that it intends to include certain application server
and integration functionality in future versions of its Windows 2000 operating
system. Microsoft has also introduced a product that includes certain basic
application server functionality. The bundling of competing functionality in
versions of Windows requires us to compete with Microsoft in the Windows
marketplace, where Microsoft has certain inherent advantages due to its
significantly greater financial, technical, marketing and other resources, its
greater name recognition, its substantial installed base and the integration of
its application server and integration functionality with Windows. We need to
differentiate our products from Microsoft's based on scalability,
functionality, interoperability with non-Microsoft platforms, performance and
reliability, and need to establish our products as more effective solutions to
customers' needs. We may not be able to successfully differentiate our products
from those offered by Microsoft, and Microsoft's entry into the application
server and integration market could materially adversely affect our 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 our current and prospective customers. Accordingly, it is possible
that new competitors or alliances among current and new competitors may emerge
and
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rapidly gain significant market share. Such competition could materially
adversely affect our ability to sell additional software licenses and
maintenance, consulting and support services on terms favorable to us. Further,
competitive pressures could require us to reduce the price of our products and
related services, which could materially adversely affect our business,
operating results and financial condition. We may not be able to compete
successfully against current and future competitors and any failure to do so
would have a material adverse effect upon our business, operating results and
financial condition.
If we fail to adequately protect our intellectual property rights, competitors
may use our technology and trademarks, which could weaken our competitive
position, reduce our revenues and increase our costs
Our success depends upon our proprietary technology. We rely on a combination
of patent, copyright, trademark and trade secret rights, confidentiality
procedures and licensing arrangements to establish and protect our proprietary
rights. It is possible that other companies could successfully challenge the
validity or scope of our patents and that our patents may not provide a
competitive advantage to us.
As part of our confidentiality procedures, we generally enter into non-
disclosure agreements with our employees, distributors and corporate partners
and into license agreements with respect to our software, documentation and
other proprietary information. Despite these precautions, third parties could
copy or otherwise obtain and use our products or technology without
authorization, or develop similar technology independently. In particular, we
have, in the past, provided certain hardware OEMs with access to our source
code, and any unauthorized publication or proliferation of this source code
could materially adversely affect our business, operating results and financial
condition. It is difficult for us to police unauthorized use of our products,
and although we are unable to determine the extent to which piracy of our
software products exists, software piracy is a persistent problem. Effective
protection of intellectual property rights is unavailable or limited in certain
foreign countries. The protection of our proprietary rights may not be adequate
and our competitors could independently develop similar technology, duplicate
our products, and they could design around patents and other intellectual
property rights we hold.
Third parties could assert that our software products and services infringe
their intellectual property rights, which could expose us to increased costs
and litigation
It is possible that third parties could claim our current or future products
infringe their rights. Any such claims, with or without merit, could cause
costly litigation that could absorb significant management time, which could
materially adversely effect our business, operating results and financial
condition. These type of claims might require us to enter into royalty or
license agreements. If required, we may not be able to obtain such royalty or
license agreements, or obtain them on terms acceptable to us, which could have
a material adverse effect upon our business, operating results and financial
condition.
Our international operations expose us to greater management, collections,
currency, intellectual property, regulatory and other risks
International revenues accounted for 41 and 34 percent of our consolidated
revenues for the quarters ended October 31, 1999 and 1998, respectively. We
sell our products and services through a network of branches and subsidiaries
located in 24 countries worldwide. In addition, we also market through
distributors in Europe and the Asia/Pacific region. We believe that our success
depends upon continued expansion of our international operations. Our
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
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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. General economic and political
conditions in these foreign markets may also impact our international revenues.
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 our Asian customers, which in turn has
resulted in the delay of orders for our products from certain Asian customers
and is likely to result in further delays and, possibly the cancellation, of
such orders. We anticipate that weak Asian conditions may continue to adversely
impact our financial results. It is difficult for us to predict the extent of
the future impact of these conditions. There can be no assurances that these
factors and other factors will not have a material adverse effect on our future
international revenues and consequently on our business and consolidated
financial condition and results of operations.
If we are unable to manage our growth, our business will suffer
We have continued to experience a period of rapid and substantial growth that
has placed, and if such growth continues would continue to place, a strain on
the Company's administrative and operational infrastructure. We have increased
the number of our employees from 120 employees in three offices in the United
States at January 31, 1996 to over 1,800 employees in over 52 offices in
24 countries at November 30, 1999. Our ability to manage our staff and growth
effectively requires us to continue to improve our operational, financial and
management controls, reporting systems and procedures. In this regard, we are
currently updating our management information systems to integrate financial
and other reporting among our multiple domestic and foreign offices. In
addition, we intend to continue to increase our staff worldwide and to continue
to improve the financial reporting and controls for our global operations. It
is possible we will not be able to successfully implement improvements to our
management information and control systems in an efficient or timely manner and
that, during the course of this implementation, we could discover deficiencies
in existing systems and controls. If we are unable to manage growth
effectively, our business, results of operations and financial condition will
be materially adversely affected.
If the market for application servers and integration software does not grow as
quickly as we expect, our revenues will be harmed
We sell our products and services in the application server and integration
markets. These markets are emerging and are characterized by continuing
technological developments, evolving industry standards and changing customer
requirements. Our success is dependent in large part on acceptance of our
products by large customers with substantial legacy mainframe systems,
customers establishing a presence on the Web for commerce, and developers of
web-based commerce applications. Our 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 and to the Internet through the use of
application server and integration technology. There can be no assurance that
the markets for application server and integration technology and related
services will continue to grow. If these markets fail to grow or grow more
slowly than we currently anticipate, or if we experience increased competition
in these markets, our business, results of operations and financial condition
will be adversely affected.
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If we lose key personnel or cannot hire enough qualified personnel, it will
adversely affect our ability to manage our business, develop new products and
increase revenue
We believe our future success will depend upon our ability to attract and
retain highly skilled personnel including our founders, Messrs. William T.
Coleman III, Alfred S. Chuang and other key members of management. Competition
for these types of employees is intense, and it is possible that we will not be
able to retain our key employees and that we will not be successful in
attracting, assimilating and retaining qualified candidates in the future. As
we seek to expand our 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 our business, results of
operations and financial condition.
Our failure to maintain ongoing sales through distribution channels will result
in lower revenues
To date, we have sold our products principally through our direct sales
force, as well as through indirect sales channels, such as system platform
companies, packaged application software developers, systems integrators and
independent consultants, independent software tool vendors and distributors.
Our ability to achieve revenue growth in the future will depend in large part
on our success in expanding our direct sales force and in further establishing
and expanding relationships with distributors, ISVs, OEMs and systems
integrators. In particular, a significant part of our strategy is to embed our
technology in products our ISV customers offer. We intend to seek distribution
arrangements with additional ISVs to embed our Web application servers in their
products. It is possible that we will not be able to successfully expand our
direct sales force or other distribution channels, secure license agreements
with additional ISVs on commercially reasonable terms or at all, and otherwise
further develop our relationships with indirect distribution channels. Moreover,
even if we succeed in these endeavors, it still may not increase our revenues.
If we invest resources in these types of expansion and our revenues do not
correspondingly increase, our business, results of operations and financial
condition will be materially and adversely affected.
We rely on informal relationships with a number of consulting and systems
integration firms to enhance our sales, support, service and marketing efforts,
particularly with respect to implementation and support of our products as well
as lead generation and assistance in the sale process. We will need to expand
our relationships with third parties in order to support license revenue
growth. Many such firms have similar, and often more established, relationships
with our principal competitors. It is possible that these and other third
parties will not provide the level and quality of service required to meet the
needs of our customers, that we will not be able to maintain an effective, long
term relationship with these third parties, and that these third parties will
not successfully meet the needs of our customers.
If we do not develop and enhance new and existing products to keep pace with
technological, market and industry changes, our revenues may decline
The market for our products is highly fragmented, competitive with
alternative computing architectures, and characterized by continuing
technological developments, 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 our existing products obsolete and unmarketable. As a result, our
success depends upon our 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. It is possible that our products will not adequately address the
changing needs of the marketplace and that we will not be successful in
developing and marketing enhancements to our 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 our business, results of operations and
financial condition.
If our products contain software defects, it could harm our revenues and expose
us to litigation
The software products we offer are internally complex and, despite extensive
testing and quality control, may contain errors or defects, especially when we
first introduce them. We may need to issue corrective releases of our software
products to fix these defects or errors. These defects and errors could also
cause damage to our reputation, loss of revenues, product returns or order
cancellations, or lack of market acceptance of our products. Accordingly, these
defects and errors could have a material and adverse effect on our business,
results of operations and financial condition.
Our license agreements with our customers typically contain provisions
designed to limit our exposure to potential product liability claims. It is
possible, however, that the limitation of liability provisions contained in our
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 we have not experienced any product liability claims to date, sale and
support of our products entails the risk of such claims, which could be
substantial in light of customers' use of such products in mission-critical
applications. If a claimant brings a product liability claim against us, it
could have a material adverse effect on our business, results of operations and
financial condition.
Our products interoperate with many parts of complicated computer systems,
such as mainframes, servers, personal computers, application software,
databases, operating systems and data transformation software. Failure of
anyone of these parts due to the Year 2000 problem could cause all or large
parts of computer systems to fail. In such circumstances, it may be difficult
to determine which part failed, and it is likely that customers will bring a
lawsuit against several suppliers. Even if our software is not at fault, we
could suffer material expense and material diversion of management time in
defending any such lawsuits.
Year 2000 issues could negatively affect our business
It is possible that our current products contain undetected errors or defects
associated with Year 2000 date functions that may result in material costs or
liabilties to us. Mpreover, our software directly and indirectly interacts with
a large number of other hardware and software systems, each of which may contain
or introduce such undetected errors or defects. Some of our customers are
running product versions that are not Year 2000 compliant. We have been
encouraging our customers to migrate to current product versions. We are unable
to predict to what extent our business may be affected if our software or the
systems that operate in conjunction with our software experience a material Year
2000 related failure. Any Year 2000 defect in our products or the software and
hardware systems with which our products operate, as well as any Year 2000
errors caused by older non-current products that were not upgraded by our
customers, could expose us to litigation that could have a material adverse
impact on us. The risks of such litigation may be particularly acute due to the
mission-critical applications for which our products are used. Some commentators
have stated that a significant amount of litigation will arise out of Year 2000
compliance issues, and we are aware of a growing number of lawsuits against
other software vendors. Because of the unprecedented nature of such litigation,
it is uncertain whether or to what extent we may be affected by it.
We could also experience serious unanticipated negative consequences caused
by undetected Year 2000 defects in our internal systems, including third party
software and hardware products. Internal systems are primarily composed of
third-party software and third-party hardware which contain embedded software
and our own software products. For example we could experience a (i) corruption
of data contained in our internal information systems or a (ii) failure of
hardware, software, or other information technology systems, causing an
interruption or failure of normal business operations. Any such events could
have a material adverse impact on our operating results. In addition, we could
experience serious unanticipated negative consequences caused by the failure of
services or products provided by third parties that are critical to the
continued our day-to-day operation, such as electrical power,
telecommunications services, and shipping services (particularly outside of
countries such as the United States where Year 2000 remediation has progressed
the furthest), which consequences could have a material adverse effect on our
business operations.
In addition, a widely-predicted freeze in deployment of new computer systems
by large corporations in the first quarter of 2000 related to remediation
of the Year 2000 problem could result in an unusual fluctuation of orders, with
a temporarily positive impact on orders received in mid and late 1999, followed
by an unusual decrease in orders in subsequent quarters.
Warburg, Pincus Ventures, L.P. and our current management can control matters
requiring stockholder approval
As of November 30, 1999, our officers and directors and their affiliates, in
the aggregate, had voting control over approximately 44 percent of our voting
common stock. In particular, Warburg, Pincus Ventures, L.P. ("Warburg") had
effective voting control over approximately 38 percent of our voting common
stock (assuming the conversion of the non-voting Class B common stock owned by
Warburg). As a result, these stockholders would be able to control matters
requiring majority stockholder approval, including the election of directors
and approval of significant corporate transactions. The voting power of Warburg
combined with our officers and directors under certain circumstances could have
the effect of delaying, or preventing a change in control.
Recent accounting pronouncements could cause us to defer revenue
The American Institute of Certified Public Accountants has issued a series of
recent pronouncements which address revenue recognition in the software
industry, including SOP 97-2, SOP 98-4, and SOP 98-9. These pronouncements
principally focus on concepts versus specific implementation guidance. We
believe we are in compliance with these standards, but the software industry
and the accounting profession are currently discussing a wide range of
potential interpretations which may result in the issuance of more
pronouncements or interpretive guidance. As future guidance becomes available
or if the software industry broadly adopts certain practices which are
different from BEA's current revenue recognition practices which could have a
material diverse effect on our business practices, financial condition, or
results of operations.
We have not fully assessed our ability to comply with SOP 98-9 using current
business practices. However, we believe that SOP 98-9 may require significantly
more revenues to be deferred for certain types of transactions.
We have a high debt balance and large interest obligations
At October 31, 1999, we had approximately $260 million of long-term
indebtedness. In connection with the sale of the notes offered hereby, we
incurred $550 million additional indebtedness. As a result of this indebtedness,
our principal and interest payment obligations will increase substantially. The
degree to which we will be leveraged could significantly harm our ability to
obtain financing for working capital, acquisitions or other purposes and could
make us more vulnerable to industry downturns and competitive pressures. Our
ability to meet our debt service obligations will be dependent upon our future
performance, which will be subject to financial, business and other factors
affecting our operations, many of which are beyond our control. In addition, our
earnings are insufficient to cover our fixed charges.
We 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 our other indebtedness, future capital expenditures
and any increased working capital requirements. If we are unable to meet our
cash requirements out of cash flow from operations, there can be no assurance
that we will be able to obtain alternative financing. In the absence of such
financing, our 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 would be
significantly reduced. If we do not generate sufficient increases in cash flow
from operations to repay the notes at maturity, we could attempt to refinance
the notes; however, no assurance can be given that such a refinancing would be
available on terms acceptable to us, if at all. Any failure by us to satisfy
our obligations 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 our other indebtedness.
The notes will rank below our existing and future senior debt, and we may be
unable to repay our obligations under the notes.
The notes will be unsecured and subordinated in right of payment to all of
our existing and future senior debt. Because the notes are subordinate to our
senior debt, if we experience:
. a bankruptcy, liquidation or reorganization,
. an acceleration of the notes due to an event of default under the
indenture, or
. certain other events
we will be permitted to make payments on the notes only after we have satisfied
all of our senior debt obligations. Therefore, we may not have sufficient
assets remaining to pay amounts due on any or all of the notes. In addition,
the notes effectively will be subordinate to all liabilities, including trade
payables, of our subsidiaries and any subsidiaries that we may in the future
acquire or establish. Consequently, our right to receive assets of any
subsidiaries upon their liquidation or reorganization, and the rights of the
holders of the notes to share in those assets, would be subordinate to the
claims of the subsidiaries' creditors.
The notes will be our obligations exclusively. The indenture for the notes
does not limit our ability, or that of any of our presently existing or future
subsidiaries, to incur senior debt, other indebtedness and other liabilities.
We may have difficulty paying what we owe under the notes if we, or any of our
subsidiaries, incur additional indebtedness or other liabilities. As of October
31, 1999, we had approximately $46 million of senior debt outstanding, and our
subsidiaries had approximately $55 million of outstanding indebtedness and
other liabilities (excluding intercompany liabilities). In addition, as of
October 31, 1999 we had $250 million of our Convertible Subordinated Notes due
June 15, 2005 outstanding. From time to time we and our subsidiaries may incur
additional indebtedness, including senior debt, which could adversely affect
our ability to pay our obligations under the notes.
We may be unable to repurchase the notes.
At maturity, the entire outstanding principal amount of the notes will become
due and payable. In addition, if a Change in Control, as defined below in
"Description of the Notes--Repurchase at Option of Holders Upon a Change in
Control," of BEA occurs, each holder of the notes may require us to repurchase
all or a portion of that holder's notes. At maturity or if a Change in Control
occurs, we may not have sufficient funds or may be unable to arrange for
additional financing to pay the principal amount or repurchase price due. Under
the terms of the indenture for the notes, we may elect, if we meet certain
conditions, to pay the repurchase price with shares of common stock. Any future
borrowing arrangements or agreements relating to senior debt to which we become
a party may contain restrictions on, or prohibitions against, our repurchases of
the notes. If the maturity date or Change in Control occurs at a time when our
other arrangements prohibit us from repurchasing the notes, we could try to
obtain the consent of the lenders under those arrangements to purchase the
notes, or we could attempt to refinance the borrowings that contain the
restrictions. If we do not obtain the necessary consents or refinance these
borrowings, we will be unable to repurchase the notes. In that case, our failure
to repurchase any tendered notes or notes due upon maturity would constitute an
event of default under the indenture. Any such default, in turn, may cause a
default under the terms of our senior debt. As a result, in those circumstances,
the subordination provisions of the indenture would, absent a waiver, prohibit
any repurchase of the notes until we pay the senior debt in full.
There may be no public market for the notes.
Prior to the initial offering of the notes, there was no trading market for
the notes. Although the Initial Purchasers advised us that they intend to
make a market in the notes, they are not obligated to do so and may discontinue
their market-making activities at any time without notice. Consequently, we
cannot ensure that any market for the notes will develop, or if one does
develop, that it will continue for any period of time. If an active market for
the notes fails to develop or continue, this failure could harm the trading
price of the notes. We do not intend to apply for listing of the notes on any
securities exchange or any automated quotation system.
16
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, as well as the Forms 10-Q, 10-K and 8-K incorporated by
reference into this prospectus, include "Forward-Looking Statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (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
BEA 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 those projected or assumed in
the Forward-Looking Statements. 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 factors described
under "Risk Factors" beginning on page 9 and the reasons described elsewhere in
this offering circular. All Forward-Looking Statements and reasons why results
may differ included in this offering circular are made as of the date hereof,
and BEA assumes no obligation to update any such Forward-Looking Statement or
reason why actual results might differ.
17
<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 Owned
Shares Beneficially Owned After Completion of
Prior to Offering(1) Offering(1)(3)
------------------------------ ------------ --------------------------
Percentage of Shares Percentage
Selling Securityholders Number of Class(2)+ Offered Number of Class(2)+
- -------------------------------------------------------- -------------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Deutsche Bank Securities Inc............................ 1,988,352 1.0% 1,988,352 0 **
$137,793,000* 25.0% 137,793,000* **
Janus Capital Corporation............................... 1,721,816 ** 1,721,816 0 **
$119,322,000* 21.6% $119,322,000* **
Deutsche Bank Securities Inc............................ 1,405,770 ** 1,405,770 0 **
$ 97,420,000* 17.7% $ 97,420,000* **
California Public Employees' Retirement System.......... 323,520 ** 323,520 0 **
$ 22,420,000* 4.0% $ 22,420,000* **
TCW Group, Inc.......................................... 221,572 ** 221,572 0 **
$ 15,355,000* 2.7% $ 15,355,000* **
MSD Portfolio LP - Investments.......................... 216,450 ** 216,450 0 **
$ 15,000,000* 2.7% $ 15,000,000* **
Van Kampen Equity Income Fund........................... 165,945 ** 165,945 0 **
$ 11,500,000* 2.0% $ 11,500,000* **
New York Life Insurance Company (NY LIC)................ 158,730 ** 158,730 0 **
$ 11,000,000* 2.0% $ 11,000,000* **
Guardian Life Insurance Co.............................. 144,300 ** 144,300 0 **
$ 10,000,000* 1.8% $ 10,000,000* **
Highbridge International LLC............................ 137,085 ** 137,085 0 **
$ 9,500,000* 1.7% $ 9,500,000* **
JMG Triton Offshore Fund, Ltd........................... 122,655 ** 122,655 0 **
$ 8,500,000* 1.5% $ 8,500,000* **
Marsico Growth & Income Fund............................ 118,614 ** 118,614 0 **
$ 8,220,000* 1.4% $ 8,220,000* **
State of Oregon Equity.................................. 115,440 ** 115,440 0 **
$ 8,000,000* 1.4% $ 8,000,000* **
JMG Capital Partners, LP................................ 93,795 ** 93,795 0 **
$ 6,500,000* 1.1% $ 6,500,000* **
Robertson Stephens...................................... 101,010 ** 101,010 0 **
7,000,000* 1.2% 7,000,000* **
Allstate Insurance Company.............................. 79,365 ** 79,365 0 **
$ 5,500,000* 1.0% $ 5,500,000* **
Delta Airlines Inc. Retirement Plan..................... 72,150 ** 72,150 0 **
$ 5,000,000* ** $ 5,000,000* **
KBC Financial Products U.S.A............................ 72,150 ** 72,150 0 **
$ 5,000,000* ** $ 5,000,000* **
Oppenheimer Convertible Securities Fund................. 72,150 ** 72,150 0 **
$ 5,000,000* ** $ 5,000,000* **
Tennessee Consolidated Retirement System................ 72,150 ** 72,150 0 **
$ 5,000,000* ** $ 5,000,000* **
Van Kampen Harbor Fund.................................. 54,747 ** 54,747 0 **
$ 3,794,000* ** $ 3,794,000* **
Nations Marsico Growth & Income Fund.................... 54,502 ** 54,502 0 **
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Owned
Shares Beneficially Owned After Completion of
Prior to Offering(1) Offering(1)(3)
------------------------------ ------------ --------------------------
Percentage of Shares Percentage
Selling Securityholders Number of Class(2)+ Offered Number of Class(2)+
- -------------------------------------------------------- -------------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
$ 3,777,000* ** $ 3,777,000* **
General Motors Employees Global Group Pension Trust..... 49,018 ** 49,018 0 **
$ 3,397,000* ** $ 3,397,000* **
Motors Insurance Corporation............................ 49,018 ** 49,018 0 **
$ 3,397,000* ** $ 3,397,000* **
Lyxor Master Fund....................................... 43,290 ** 43,290 0 **
$ 3,000,000* ** $ 3,000,000* **
PRIM Board.............................................. 39,826 ** 39,826 0 **
$ 2,760,000* ** $ 2,760,000* **
Morgan Stanley Dean Witter Convertible Securities Trust. 36,065 ** 36,065 0 **
$ 2,500,000* ** $ 2,500,000* **
Nomura Securities International Inc..................... 36,065 ** 36,065 0 **
$ 2,500,000* ** $ 2,500,000* **
Bear, Stearns & Co. Inc................................. 28,860 ** 28,860 0 **
$ 2,000,000* ** $ 2,000,000* **
New York Life Insurance and Annuity Corporation (NY 28,860 ** 28,860 0 **
LIAC).................................................. $ 2,000,000* ** $ 2,000,000* **
White River Securities LLC.............................. 28,860 ** 28,860 0 **
$ 2,000,000* ** $ 2,000,000* **
State of Maryland....................................... 26,493 ** 26,493 0 **
$ 1,836,000* ** $ 1,836,000* **
State Street Bank DTC #997.............................. 26,493 ** 26,493 0 **
$ 1,836,000* ** $ 1,836,000* **
Arkansas PERS........................................... 25,829 ** 25,829 0 **
$ 1,790,000* ** $ 1,790,000* **
Delaware PERS........................................... 23,448 ** 23,448 0 **
$ 1,625,000* ** $ 1,625,000* **
EQAT Alliance Growth Investors.......................... 19,480 ** 19,480 0 **
$ 1,350,000* ** $ 1,350,000* **
Equitable Life Insurance Separate Account - Convertibles 17,893 ** 17,893 0 **
$ 1,240,000* ** $ 1,240,000* **
Starvest Combined Portfolio............................. 16,017 ** 16,017 0 **
$ 1,110,000* ** $ 1,110,000* **
Pacific Life Insurance Company.......................... 14,430 ** 14,430 0 **
$ 1,000,000* ** $ 1,000,000* **
EQAT Alliance Balanced Account.......................... 14,357 ** 14,357 0 **
$ 995,000* ** $ 995,000* **
General Motors Employees Global Group Pension Trust..... 12,987 ** 12,987 0 **
$ 900,000* ** $ 900,000* **
Fortis Series Fund, Inc. - Growth and Income Series.... 12,265 ** 12,265 0 **
$ 850,000* ** $ 850,000* **
EQAT Alliance Growth Investors.......................... 118,326 ** 118,326 0 **
$ 820,000* ** $ 820,000* **
AIG/National Union Fire Insurance....................... 11,688 ** 11,688 0 **
$ 810,000* ** $ 810,000* **
U.S. Olympic Foundation................................. 11,544 ** 11,544 0 **
$ 800,000* ** $ 800,000* **
ICI American Holdings Trust............................. 11,255 ** 11,255 0 **
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Owned
Shares Beneficially Owned After Completion of
Prior to Offering(1) Offering(1)(3)
------------------------------ ------------ --------------------------
Percentage of Shares Percentage
Selling Securityholders Number of Class(2)+ Offered Number of Class(2)+
- -------------------------------------------------------- -------------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
$ 780,000* ** $ 780,000* **
Boulder Capital Inc..................................... 10,822 ** 10,822 0 **
$ 750,000* ** $ 750,000* **
Boulder II Limited...................................... 10,822 ** 10,822 0 **
$ 750,000* ** $ 750,000* **
Onex Industrial Partners Limited........................ 10,822 ** 10,822 0 **
$ 750,000* ** $ 750,000* **
Pebble Capital Inc...................................... 10,822 ** 10,822 0 **
$ 750,000* ** $ 750,000* **
Zeneca Holdings Pension Trust........................... 10,750 ** 10,750 0 **
$ 745,000* ** $ 745,000* **
Van Kampen Convertible Securities Fund.................. 10,187 ** 10,187 0 **
$ 706,000* ** $ 706,000* **
Associated Electric & Gas Insurance Services Limited.... 10,101 ** 10,101 0 **
$ 700,000* ** $ 700,000* **
Hamilton, Mary Ann...................................... 10,101 ** 10,101 0 **
$ 700,000* ** $ 700,000* **
Key Asset Management, Inc. as agent for the Victory 10,101 ** 10,101 0 **
Convertible Securities Fund............................ $ 700,000* ** $ 700,000* **
Family Service Life Insurance co........................ 8,658 ** 8,658 0 **
$ 600,000* ** $ 600,000* **
Nations Marsico Annuity Growth & Income................. 7,258 ** 7,258 0 **
$ 503,000* ** 503,000* **
Hamilton Family Trust................................... 7,215 ** 7,215 0 **
$ 500,000* ** $ 500,000* **
Value Line Convertible Fund, Inc........................ 7,215 ** 7,215 0 **
$ 500,000* ** $ 500,000* **
Memphis Light, Gas & Water Retirement Fund.............. 5,988 ** 5,988 0 **
$ 415,000* ** $ 415,000* **
Guardian Pension Trust.................................. 5,772 ** 5,772 0 **
$ 400,000* ** $ 400,000* **
Nalso Chemical Company.................................. 5,266 ** 5,266 0 **
$ 365,000* ** $ 365,000* **
SoundShore Opportunity Holding Fund Ltd................. 4,329 ** 4,329 0 **
$ 300,000* ** $ 300,000* **
Merrill Lynch Pierce Fenner & Smith Inc................. 5,050 ** 5,050 0 **
$ 350,000* ** $ 350,000* **
Goldman Sachs and Company............................... 4,300 ** 4,300 0 **
$ 298,000* ** $ 298,000* **
Merrill Lynch Insurance Group........................... 4,256 ** 4,256 0 **
$ 295,000* ** $ 295,000* **
Elliott Associates, L.P................................. 3,607 ** 3,607 0 **
$ 250,000* ** $ 250,000* **
Westgate International, L.P............................. 3,607 ** 3,607 0 **
$ 250,000* ** $ 250,000* **
Occidental Petroleum.................................... 3,261 ** 3,261 0 **
$ 226,000* ** $ 226,000* **
General Motors Foundation, Inc.......................... 2,669 ** 2,669 0 **
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Owned
Shares Beneficially Owned After Completion of
Prior to Offering(1) Offering(1)(3)
------------------------------ ------------ --------------------------
Percentage of Shares Percentage
Selling Securityholders Number of Class(2)+ Offered Number of Class(2)+
- -------------------------------------------------------- -------------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
$ 185,000* ** $ 185,000* **
Shell Pension Trust..................................... 2,568 ** 2,568 0 **
$ 178,000* ** $ 178,000* **
Ohio Workers Compensation............................... 2,236 ** 2,236 0 **
$ 155,000* ** $ 155,000* **
The First Foundation.................................... 2,020 ** 2,020 0 **
$ 140,000* ** $ 140,000* **
New Orleans Firefighters Pension/Relief Fund............ 1,919 ** 1,919 0 **
$ 133,000* ** $ 133,000* **
Grady Hospital Foundation............................... 1,847 ** 1,847 0 **
$ 128,000* ** $ 128,000* **
Grable Foundation....................................... 1,760 ** 1,760 0 **
$ 122,000* ** $ 122,000* **
Jackson Investment Fund Ltd............................. 1,659 ** 1,659 0 **
$ 115,000* ** $ 115,000* **
City University of New York............................. 1,240 ** 1,240 0 **
$ 86,000* ** $ 86,000* **
Local Initiative Support Corporation.................... 822 ** 822 0 **
$ 57,000* ** $ 57,000* **
David Lipscomb University General Endowment............. 793 ** 793 0 **
$ 55,000* ** $ 55,000* **
BVI Electricity Corporate Pension Fund.................. 476 ** 476 0 **
$ 33,000* ** $ 33,000* **
Delphi Foundation, Inc.................................. 259 ** 259 0 **
$ 18,000* ** $ 18,000* **
1976 Distribution F/B/O/ Jane A. Lauder................. 245 ** 245 0 **
$ 17,000* ** $ 17,000* **
1976 Distribution Trust F/B/O Aerin Lauder Zinterhof.... 245 ** 245 0 **
$ 17,000* ** $ 17,000* **
Island Holdings......................................... 216 ** 216 0 **
$ 15,000* ** $ 15,000* **
Equitable Life Assurance Separate Account - Balanced.... 72 ** 72 0 **
$ 5,000* ** $ 5,000* **
</TABLE>
* Amount of notes
** Less than one percent
+ Percentage of notes held by the listed selling securityholder
- ---------------------
(1) Share amounts assume conversion of the notes, at an assumed conversion rate
of 14.43 shares per $1,000 principal amount of notes.
(2) Based upon 182,717,225 shares of Common Stock and an aggregate amount of
$550,000,000 of notes outstanding as of February 29, 2000.
(3) Assumes offer and sale of all notes and shares, although selling
securityholders are not obligated to sell any notes or shares securities.
Because the selling securityholders may, pursuant to this prospectus, or a
prospectus supplement, offer all or some portion of the notes they presently
hold, no estimate can be given as to the amount of the notes that will be held
by the selling securityholders upon termination of any such sales. In addition,
the selling securityholders identified in this prospectus, or a prospectus
supplement, may have sold, transferred or otherwise disposed of all or a portion
of their notes since the date on which they provided the information regarding
their notes, and requested registration thereof, in transactions exempt from the
registration requirements of the Securities Act of 1933. Accordingly, since
certain other selling securityholders may have purchased these notes and also
requested registration thereof, the aggregate amount of securities listed under
the caption "Selling Securityholders" in this prospectus, or a prospectus
supplement, may exceed the total amount of securities issued or issuable by us.
See "Plan of Distribution." We may from time to time, in accordance with the
registration rights agreement, include additional selling securityholders or
update the amount of securities held by selling securityholders in future
supplements to the prospectus.
21
<PAGE>
DESCRIPTION OF THE NOTES
We issued the notes under a document called the "Indenture". The Indenture is
a contract between us and State Street Bank and Trust Company of California,
N.A., as Trustee (the "Trustee") and is filed as an exhibit to the registration
statement of which this prospectus is a part. The Indenture and the notes are
governed by New York law. Because this section is a summary, it does not
describe every aspect of the notes and the Indenture. This summary is subject to
and qualified in its entirety by reference to all of the provisions of the
Indenture, including definitions of certain terms used in the Indenture. For
example, in this section we use capitalized words to signify defined terms that
have been given special meaning in the Indenture. We describe the meaning of
only the more important terms. Wherever we refer to particular defined terms,
those defined terms are incorporated by reference here. In this section,
references to "BEA", "we", "our" or "us" refer solely to BEA Systems, Inc. and
not its subsidiaries.
General
The notes are general, unsecured obligations of BEA. The notes are
subordinated on the same basis as our outstanding 4% Convertible Subordinated
Notes due June 15, 2005, which means that they rank behind certain of our
indebtedness as described below. The notes are limited to $550,000,000 aggregate
principal amount. We are required to repay the principal amount of the notes in
full on December 15, 2006. The notes bear interest at the rate per annum shown
on the front cover of this Offering Circular from December 20, 1999. We will pay
interest on the notes on June 15 and December 15 of each year, commencing on
June 15, 1999. Interest payable per $1,000 principal amount of notes for the
period from December 20, 1999 to June 15, 2000 will be $19.4444.
The notes are convertible into shares of our common stock initially at the
conversion rate stated on the front cover of this Prospectus at any time before
the close of business on December 15, 2006, unless the notes have been
previously redeemed or repurchased. The conversion rate may be adjusted as
described below.
We may redeem the notes at our option at any time on or after December 20,
2002, in whole or in part, at the redemption prices set forth below under "--
Optional Redemption by BEA," plus accrued and unpaid interest to the redemption
date. If there is a Change in Control of BEA, you may have the right to require
us to repurchase your notes as described below under "--Repurchase at Option of
Holders Upon a Change in Control."
Form, Denomination, Transfer, Exchange and Book-Entry Procedures
The notes are issuable:
. only in fully registered form;
. without interest coupons; and
. in denominations of $1,000 and greater multiples.
The notes are evidenced by one or more global notes which have been deposited
with the Trustee as custodian for DTC and registered in the name of Cede & Co.
("Cede"), as nominee of DTC. 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.
The global note will not be registered in the name of any person, or exchanged
for notes that are registered in the name of any person, other than DTC or its
nominee unless either of the following occurs:
. DTC notifies us that it is unwilling, unable or no longer qualified to
continue acting as the depositary for the global note; or
. an Event of Default with respect to the notes represented by the global note
has occurred and is continuing.
22
<PAGE>
In those circumstances, DTC will determine in whose names any securities issued
in exchange for the global note will be registered.
DTC or its nominee will be considered the sole owner and holder of the global
note for all purposes, and as a result:
. you cannot get notes registered in your name if they are represented by the
global note;
. you cannot receive certificated (physical) notes in exchange for your
beneficial interest in the global notes;
. you will not be considered to be the owner or holder of the global note or
any note it represents for any purpose; and
. all payments on the global note will be made to DTC or its nominee.
The laws of some jurisdictions require that certain kinds of purchasers (for
example, certain insurance companies) can only own securities in definitive
(certificated) form. These laws may limit your ability to transfer your
beneficial interests in the global note to these types of purchasers.
Only institutions (such as a securities broker or dealer) that have accounts
with the DTC or its nominee (called "participants") and persons that may hold
beneficial interests through participants can own a beneficial interest in the
global note. The only place where the ownership of beneficial interests in the
global note will appear and the only way the transfer of those interests can be
made will be on the records kept by DTC (for their participants' interests) and
the records kept by those participants (for interests of persons held by
participants on their behalf).
Secondary trading in bonds and notes of corporate issuers is generally settled
in clearinghouse (that is, next-day) funds. In contrast, beneficial interests in
a global note usually trade in DTC's same-day funds settlement system, and
settle in immediately available funds. We make no representations as to the
effect that settlement in immediately available funds will have on trading
activity in those beneficial interests.
We will make cash payments of interest on and principal of and the redemption
or repurchase price of the global note to Cede, the nominee for DTC, as the
registered owner of the global note. We will make these payments by wire
transfer of immediately available funds on each payment date.
We have been informed that DTC's practice is to credit participants' accounts
on the payment date with payments in amounts proportionate to their respective
beneficial interests in the notes represented by the global note as shown on
DTC's records, unless DTC has reason to believe that it will not receive payment
on that payment date. Payments by participants to owners of beneficial interests
in notes represented by the global note held through participants will be the
responsibility of those participants, as is now the case with securities held
for the accounts of customers registered in "street name."
We will send any redemption notices to Cede. We understand that if less than
all the notes are being redeemed, DTC's practice is to determine by lot the
amount of the holdings of each participant to be redeemed.
We also understand that neither DTC nor Cede will consent or vote with respect
to the notes. We have been advised that under its usual procedures, DTC will
mail an "omnibus proxy" to us as soon as possible after the record date. The
omnibus proxy assigns Cede's consenting or voting rights to those participants
to whose accounts the notes are credited on the record date identified in a
listing attached to the omnibus proxy.
Because DTC can only act on behalf of participants, who in turn act on behalf
of indirect participants, the ability of a person having a beneficial interest
in the principal amount represented by the global note to pledge the interest to
persons or entities that do not participate in the DTC book-entry system, or
otherwise take actions in respect of that interest, may be affected by the lack
of a physical certificate evidencing its interest.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes (including the presentation of notes for exchange) only at the
direction of one or more participants to whose account with DTC interests in the
global
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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 also advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Certain of such participants (or their
representatives), together with other entities, own DTC. Indirect access to the
DTC system is available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
The policies and procedures of DTC, which may change periodically, will apply
to payments, transfers, exchanges and other matters relating to beneficial
interests in the global note. We and the Trustee have no responsibility or
liability for any aspect of DTC's or any participants' records relating to
beneficial interests in the global note, including for payments made on the
global note, and we and the Trustee are not responsible for maintaining,
supervising or reviewing any of those records.
Conversion Rights
You may, at your option, convert any portion of the principal amount of any
note that is an integral multiple of $1,000 into shares of our common stock at
any time on prior to the close of business on the maturity date, unless the
notes have been previously redeemed or repurchased, at a conversion rate of
14.43 shares of common stock per $1,000 principal amount of notes. The
conversion rate is equivalent to a conversion price of approximately $69.30. The
conversion rate was adjusted on December 19, 1999 to reflect BEA's 2-for-1 stock
split, and may be adjusted in certain events as described below. Your right to
convert a note called for redemption or delivered for repurchase will terminate
at the close of business on the redemption date or repurchase date for that
note, unless we default in making the payment due upon redemption or repurchase.
You may convert all or part of any note 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, a
copy of which may be obtained by the Trustee. The conversion date will be the
date on which the note and the duly signed and completed notice of conversion
are so delivered.
As promptly as practicable on or after the conversion date, we will issue and
deliver to the Trustee a certificate or certificates for the number of full
shares of our common stock issuable upon conversion, together with payment in
lieu of any fraction of a share. The certificate will then be sent by the
Trustee to the Conversion Agent for delivery to the Holder. The shares of our
common stock issuable upon conversion of the notes will be fully paid and
nonassessable and will rank pari passu with the other shares of our common
stock.
If you surrender a note for conversion on a date that is not an Interest
Payment Date, you will not be entitled to receive any interest for the period
from the next preceding Interest Payment Date to the conversion date, except as
described below in this paragraph. 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 for which the right to convert 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.
No other payment or adjustment for interest, or for any dividends in respect
of, our common stock will be made upon conversion. Holders of our common stock
issued upon conversion will not be entitled to receive any dividends payable to
holders of our common stock as of any record time or date before the close of
business on the conversion date. We will not
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<PAGE>
issue fractional shares upon conversion. Instead, we will pay cash based on the
market price of our common stock at the close of business on the conversion
date.
You will not be required to pay any taxes or duties relating to the issue or
delivery of our common stock on conversion but you will be required to pay any
tax or duty relating to any transfer involved in the issue or delivery of our
common stock in a name other than yours. Certificates representing shares of our
common stock will not be issued or delivered unless all taxes and duties, if
any, payable by you have been paid.
The conversion rate will be subject to adjustment for, among other things:
. dividends (and other distributions) payable in our common stock on shares of
our capital stock,
. the issuance to all holders of our common stock of rights, options or
warrants entitling them to subscribe for or purchase our 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,
. subdivisions, combinations and reclassifications of our common stock,
. distributions to all holders of our common stock of evidences of indebtedness
of BEA, 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 discussed below),
. distributions consisting exclusively of cash (excluding any cash portion of
distributions referred to in the immediately preceding clause, or cash
distributed upon a merger or consolidation to which the next succeeding
paragraph applies) to all holders of our common stock in an aggregate amount
that, combined together with (1) other such all-cash distributions made
within the preceding 365-day period in respect of which no adjustment has
been made and (2) any cash and the fair market value of other consideration
payable in connection with any tender offer by us or any of our subsidiaries
for our common stock concluded within the preceding 365-day period in respect
of which no adjustment has been made, exceeds 10% of our market
capitalization (being the product of the Current Market Price per share of
the common stock on the record date for such distribution and the number of
shares of common stock then outstanding), and
. the successful completion of a tender offer made by us or any of our
subsidiaries for our common stock which involves an aggregate consideration
that, together with (1) any cash and other consideration payable in a tender
offer by us or any of our subsidiaries for our common stock expiring within
the 365-day period preceding the expiration of such tender offer in respect
of which no adjustment has been made and (2) the aggregate amount of any such
all-cash distributions referred to in the immediately preceding clause above
to all holders of our common stock within the 365-day period preceding the
expiration of such tender offer in respect of which no adjustments have been
made, exceeds 10% of our market capitalization on the expiration of such
tender offer.
We reserve the right to such increases in the conversion rate in addition to
those required by the foregoing provisions as we consider 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. We will
not be required to make any adjustment to the conversion rate until the
cumulative adjustments amount to 1.0% or more of the conversion rate. We will
compute all adjustments to the conversion rate and will give notice by mail to
holders of the registered notes of any adjustments.
In case of any consolidation or merger of BEA with or into another entity or
any merger of another entity into BEA (other than a merger which does not result
in any reclassification, conversion, exchange or cancellation of our common
stock), or in case of any sale or transfer of all or substantially all of our
assets, each note then outstanding will become convertible only into the kind
and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
common stock into which the notes were convertible immediately prior to the
consolidation or merger or sale or transfer.
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<PAGE>
We may increase the conversion rate for any period of at least 20 days, upon
at least 15 days notice, if our Board of Directors determines that such increase
would be in our best interest. Any such determination will be conclusive. We
will give holders of notes at least 15 days' notice of such an increase in the
conversion rate. No such increase will be taken into account for purposes of
determining:
. whether the closing price of our common stock exceeds the conversion price by
105% in connection with an event which otherwise would be a Change In Control
as defined below, and
. whether the closing price of our common stock is at least 140% of the
conversion price for purposes of determining whether we may call the notes
for redemption under "--Optional Redemption by BEA" below.
If at any time we make a distribution of property to our stockholders that
would be taxable to such stockholders as a dividend for United States federal
income tax purposes, such as distributions of evidences of indebtedness or
assets of BEA, but generally not stock dividends on common stock or rights to
subscribe for common stock, and, pursuant to the anti-dilution provisions of the
Indenture, the number of shares into which notes are convertible is increased,
that increase may be deemed for United States federal income tax purposes to be
the payment of a taxable dividend to holders of notes.
Subordination
The notes are subordinated on the same basis as our outstanding 4% Convertible
Subordinated Notes due June 15, 2005 and, as a result, the payment of the
principal, any premium and interest on the notes, including amounts payable on
any redemption or repurchase, will be subordinated to the prior payment in full,
in cash or other payment satisfactory to holders of Senior Debt, of all of our
Senior Debt. The notes are also effectively subordinated to any debt or other
liabilities of our subsidiaries. On October 31, 1999, we had approximately $46
million of Senior Debt and our subsidiaries had approximately $55 million of
liabilities (excluding intercompany liabilities).
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<PAGE>
"Senior Debt" 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:
. our indebtedness evidenced by a credit or loan agreement, note, bond,
debenture or other written obligation,
. all of our obligations for money borrowed,
. all of our obligations evidenced by a note or similar instrument given in
connection with the acquisition of any businesses, properties or assets of
any kind,
. our obligations (1) as lessee under leases required to be capitalized on the
balance sheet of the lessee under generally accepted accounting principles or
(2) as lessee under other leases for facilities, capital equipment or related
assets, whether or not capitalized, entered into or leased for financing
purposes,
. all of our obligations under interest rate and currency swaps, caps, floors,
collars, hedge agreements, forward contracts or similar agreements or
arrangements,
. all of our obligations with respect to letters of credit, bankers'
acceptances and similar facilities (including reimbursement obligations with
respect to the foregoing),
. all of our obligations issued or assumed as the deferred purchase price of
property or services (but excluding trade accounts payable and accrued
liabilities arising in the ordinary course of business),
. all obligations of the type referred to in the above clauses of another
person and all dividends of another person, the payment of which, in either
case, we have assumed or guaranteed, or for which we are responsible or
liable, directly or indirectly, jointly or severally, as obligor, guarantor
or otherwise, or which are secured by a lien on our property, and
. renewals, extensions, modifications, replacements, restatements and
refundings of, or any indebtedness or obligation issued in exchange for, any
such indebtedness or obligation described in the above clauses of this
definition.
Senior Debt will not include the notes, our 4% Convertible Subordinated Notes
due June 15, 2005 or any other indebtedness or obligation if its terms or the
terms of the instrument under which or pursuant to which it is issued expressly
provide that it is not superior in right of payment to the notes.
We may not make any payment on account of principal, premium or interest
(including Liquidation Damages, if any) on the notes, or redemption or
repurchase of the notes, if either of the following occurs:
. we default in our obligations to pay principal, premium, interest or other
amounts on our Senior Debt, including a default under any redemption or
repurchase obligation, and the default continues beyond any grace period that
we may have to make those payments; or
. any other default occurs and is continuing on any Designated Senior Debt and
(1) the default permits the holders of the Designated Senior Debt to
accelerate its maturity and (2) the Trustee has received a notice (a "Payment
Blockage Notice") of the default from BEA, the holder of such debt or such
other person permitted to give such notice under the Indenture.
If payments of the notes have been blocked by a payment default on Senior
Debt, payments on the notes may resume when the payment default has been cured
or waived or ceases to exist. If payments on the notes have been blocked by a
nonpayment default, payments on the notes may resume on the earlier of (1) the
date the nonpayment default is cured or waived or ceases to exist or (2) 179
days after the Payment Blockage Notice is received.
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<PAGE>
No nonpayment default that existed on the day a Payment Blockage Notice was
delivered to the Trustee can be used as the basis for any subsequent Payment
Blockage Notice. In addition, once a holder of Designated Senior Debt has
blocked payment on the notes by giving a Payment Blockage Notice, no new period
of payment blockage can be commenced pursuant to a subsequent Payment Blockage
Notice until both of the following are satisfied:
. 365 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice; and
. all scheduled payments of principal, any premium and interest with respect to
the notes that have come due have been paid in full in cash.
"Designated Senior Debt" means our obligations under any particular Senior
Debt in which the instrument creating or evidencing the same or the assumption
or guarantee thereof (or related agreements or documents to which we are a
party) expressly provides that such indebtedness shall be "Designated Senior
Debt" for purposes of the Indenture. The instrument, agreement or other document
evidencing any Designated Senior Debt may place limitations and conditions on
the right of such Senior Debt to exercise the rights of Designated Senior Debt.
In addition, upon any acceleration of the principal due on the notes as a
result of an Event of Default or payment or distribution of our assets to
creditors upon any dissolution, winding up, liquidation or reorganization,
whether voluntary or involuntary, marshaling of assets, assignment for the
benefit of creditors, or in bankruptcy, insolvency, receivership or other
similar proceedings, all principal, premium, if any, interest and other amounts
due on all Senior Debt must be paid in full before you are entitled to receive
any payment. By reason of such subordination, in the event of insolvency, our
creditors who are holders of Senior Debt are likely to recover more, ratably,
than the you are, and you will likely to experience a reduction or elimination
of payments on the notes.
In addition, the notes will be "structurally subordinated" to all indebtedness
and other liabilities, including trade payables and lease obligations, of our
subsidiaries. This occurs because any right of BEA to receive any assets of our
subsidiaries upon their liquidation or reorganization, and the 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 BEA itself is recognized as a creditor of
such subsidiary, in which case the claims of BEA would still be subordinate to
any security interest in the assets of the subsidiary and any indebtedness of
the subsidiary senior to that held by BEA.
The Indenture does not limit our ability to incur Senior Debt or our ability
or the ability of our subsidiaries to incur any other indebtedness.
Optional Redemption by BEA
On or after December 20, 2002 we may redeem the notes, in whole or in part, at
the prices set forth below. If we elect to call all or part of the notes, we
will give at least 30, but no more than 60, days notice to you. We may only
redeem the notes from December 20, 2002 through December 14, 2004, if the
closing price for our 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 of the date we call all or part of the notes for
redemption.
The redemption price, expressed as a percentage of principal amount, is as
follows for the 12-month periods beginning on December 15 of the following years
(December 20 through December 14 in the case of the first such period):
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002 102.286%
2003 101.714%
2004 101.143%
2005 100.571%
</TABLE>
and thereafter is equal to 100% of the principal amount, in each case together
with accrued interest to the date of redemption.
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No sinking fund is provided for the notes.
Payment and Conversion
We will make all payments of principal and interest on the notes by dollar
check drawn on an account maintained at a bank in The City of New York. If you
hold registered notes with a face value greater than $2,000,000, at your request
we will make payments of principal or interest to you by wire transfer to an
account maintained by you at a bank in The City of New York. Payment of any
interest on the notes will be made to the person in whose name the 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"). If you hold registered notes
with a face value in excess of $2,000,000 and you would like to receive payments
by wire transfer, you will be required to provide the Trustee with wire transfer
instructions at least 15 days prior to the relevant payment date.
Payments on any 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, we and
the Trustee will treat the persons in whose names the notes, including any
global note, are registered as the owners for the purpose of receiving payments
and for all other purposes. Consequently, neither we, the Trustee nor any of our
agents or the Trustee's agents has or will have any responsibility or liability
for (1) 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 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 global note, or
(2) any other matter relating to the actions and practices of DTC or any of its
participants or indirect participants.
We will not be required to make any payment on the notes due on any day which
is not a business day until the next succeeding business day. The payment made
on the next succeeding business day will be treated as though it were paid on
the original due date and no interest will accrue on the payment for the
additional period of time.
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."
We have initially appointed the Trustee as paying agent and conversion agent.
We may terminate the appointment of any paying agent or conversion agent and
appoint additional or other paying agents and conversion agents. However, 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 us as
provided in the Indenture, the Trustee 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 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 us,
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 the payment has
become due and payable will be repaid to us, and you will then look only to us
for payment.
Repurchase at Option of Holders Upon a Change in Control
If a Change in Control as defined below occurs, you will have the right, at
your option, to require us to repurchase all of your notes not previously called
for redemption, or any portion of the principal amount thereof, that is equal to
$1,000 or an integral multiple of $1,000. The price we are required to pay is
100% of the principal amount of the notes to be repurchased, together with
interest accrued to, but excluding, the repurchase date.
At our option, instead of paying the repurchase price in cash, we may pay the
repurchase price in our common stock valued at 95% of the average of the closing
prices of the our common stock for the five trading days immediately preceding
and including the third day prior to the repurchase date. We may only pay the
repurchase price in our common stock if we satisfy conditions provided in the
Indenture.
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Within 30 days after the occurrence of a Change in Control, we are obligated
to give to you notice of the Change in Control and of the repurchase right
arising as a result of the Change of Control. We must also deliver a copy of
this notice to the Trustee. To exercise the repurchase right, you must deliver
on or before the 30th day after the date of our notice irrevocable written
notice to the Trustee of your exercise of your repurchase right, together with
the notes with respect to which the right is being exercised. We are required to
repurchase the notes on the date that is 45 days after the date of our notice.
A Change in Control shall be deemed to have occurred at such time after the
original issuance of the notes as:
. any person, including any syndicate or group deemed to be a "person" under
Section 13(d)(3) of the Exchange Act, acquires a beneficial ownership,
directly or indirectly, through a purchase, merger or other acquisition
transaction or series of transactions, of shares of our capital stock
entitling the person to exercise 50% or more of the total voting power of all
shares of our capital stock that is entitled to vote generally in elections
of directors, other than (A) an acquisition by us, any of our subsidiaries or
any of our employee benefit plans or (B) an 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
. we merge or consolidate with or into any other person, any merger of another
person into us, or we convey, sell, transfer or lease all or substantially
all of our assets to another Person, other than (1) any such transaction (a)
that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of our capital stock and (b) pursuant to
which the holders of our 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 (2) any merger which is effected
solely to change our jurisdiction of incorporation and results in a
reclassification, conversion or exchange of outstanding shares of our common
stock into solely shares of common stock.
However, a Change in Control will not be deemed to have occurred if the
closing price per share of our common stock for any five trading days within
the period of 10 consecutive trading days ending immediately after the later
of the Change in Control or the public announcement of the Change in Control,
in the case of a Change in Control relating to an acquisition of capital
stock, or the period of 10 consecutive trading days ending immediately before
the Change in Control, in the case of Change in Control relating to a merger,
consolidation or asset sale, equals or exceeds 105% of the conversion price
of the notes in effect on each of those trading days.
For purposes of these provisions:
. the conversion price is equal to $1,000 divided by the conversion rate;
. whether a person is a "beneficial owner" will be determined in accordance
with Rule 13d-3 under the Exchange Act; and
. "person" includes any syndicate or group that would be deemed to be a
"person" under Section 13(d)(3) of the Exchange Act.
Rule 13e-4 under the Exchange Act requires the dissemination of prescribed
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to you. We will
comply with this rule to the extent it applies at that time.
We may, to the extent permitted by applicable law, at any time purchase notes
in the open market, by tender at any price or by private agreement. Any note
that we purchase may, to the extent permitted by applicable law and subject to
restrictions contained in the purchase agreement with the initial purchasers, be
re-issued or resold or may, at our option, be surrendered to the Trustee for
cancellation. Any notes surrendered for cancellation may not be re-issued or
resold and will be canceled promptly.
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The definition of Change in Control includes a phrase relating to the
conveyance, transfer, sale, lease or disposition of "all or substantially all"
of our assets. There is no precise, established definition of the phrase
"substantially all" under applicable law. Accordingly, your ability to require
us to repurchase your notes as a result of conveyance, transfer, sale, lease or
other disposition of less than all of our assets may be uncertain.
The foregoing provisions would not necessarily provide you with protection if
we are involved in a highly leveraged or other transaction that may adversely
affect you.
Our ability to repurchase notes upon the occurrence of a Change in Control is
subject to important limitations. Some of the events constituting a Change in
Control could result in an event of default under our Senior Debt. Moreover, a
Change in Control could cause an event of default under, or be prohibited or
limited by, the terms of our Senior Debt. As a result, unless we were to obtain
a waiver, a repurchase of the notes in cash could be prohibited under the
subordination provisions of the Indenture until the Senior Debt is paid in full.
Although we have the right to repurchase the notes with our common stock,
subject to certain conditions, we cannot assure you that we would have the
financial resources, or would be able to arrange financing, to pay the
repurchase price in cash for all the notes that might be delivered by holders of
notes seeking to exercise the repurchase right. If we were to fail to repurchase
the notes when required following a Change in Control, an Event of Default under
the Indenture would occur, whether or not such repurchase is permitted by the
subordination provisions of the Indenture. Any such default may, in turn, cause
a default under our Senior Debt. See "--Subordination".
Mergers and Sales of Assets by the Company
We may not consolidate with or merge into any other person or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any person, and we may not permit any person to consolidate with or merge
into us or convey, transfer, sell or lease such person's properties and assets
substantially as an entirety to us unless:
. the person formed by such consolidation or into or with which we are merged
or the person to which our properties and assets 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 within the United States or the District of Columbia
and, if we are not the surviving person, the such person assumes the payment
of the principal of, premium, if any, and interest on the notes and the
performance of our other covenants under the Indenture, and
. immediately after giving effect to the transaction, no Event of Default, and
no event that, after notice or lapse of time or both, would become an Event
of Default, will have occurred and be continuing.
Events of Default
The following will be Events of Default under the Indenture:
. we fail to pay principal of or premium, if any, on any note when due, whether
or not prohibited by the subordination provisions of the Indenture;
. we fail to pay any interest, including any Liquidated Damages, on any note
when due, which failure continues for 30 days, whether or not prohibited by
the subordination provisions of the Indenture;
. we fail to provide notice of a Change in Control, whether or not such notice
is prohibited by the subordination provisions of the Indenture;
. we fail to perform any other covenant in the Indenture, which failure
continues for 60 days after written notice as provided in the Indenture;
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. any indebtedness under any bonds, debentures, notes or other evidences of
indebtedness for money borrowed (or any guarantee thereof) by us or any of
our significant subsidiaries in an aggregate principal amount in excess of
$10,000,000 is not paid when due 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
. certain events of bankruptcy, insolvency or reorganization involving us or
any of our significant subsidiaries.
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 holder, unless the holder shall
have offered reasonable indemnity to the Trustee. Subject to providing
indemnification of the Trustee, the holders of a majority in aggregate principal
amount of the outstanding notes will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee.
If an Event of Default other than an Event of Default arising from events of
insolvency, bankruptcy or reorganization with respect to BEA occurs and is
continuing, either the Trustee or the holders of at least 25% in principal
amount of the outstanding notes may, subject to the subordination provisions of
the Indenture, accelerate the maturity of all notes. However, 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 the Events of Default, unless it
relates to 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 arising from events of
insolvency, bankruptcy or reorganization with respect to BEA occurs, then the
principal of, and accrued interest on, all the notes will automatically become
immediately due and payable without any declaration or other act on the part of
the holders of the notes or the Trustee. For information as to waiver of
defaults, see "--Meetings, Modification and Waiver."
You will not have any right to institute any proceeding with respect to the
Indenture, or for any remedy under the Indenture, unless you give 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 have made written
request, and offered reasonable indemnity, to the Trustee to institute
proceedings, and the Trustee has not received from the holders of a majority in
aggregate principal amount of the outstanding notes a direction inconsistent
with the written request and shall have failed to institute such proceeding
within 60 days. However, these limitations do not apply to a suit instituted by
you for the enforcement of payment of the principal of, premium, if any, or
interest, including Liquidated Damages, on your note on or after the respective
due dates expressed in your note or your right to convert your note in
accordance with the Indenture.
We will be required to furnish to the Trustee annually a statement as to our
performance of certain of our 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 us 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.
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.
However, a modification or amendment requires the consent of the holder of
each outstanding note affected if it would:
32
<PAGE>
. change the stated maturity of the principal or interest of a note;
. reduce the principal amount, any premium or interest on any note;
. reduce the amount payable upon a redemption or mandatory repurchase;
. modify the provisions with respect to the repurchase rights of holders of
notes in a manner adverse to the holders;
. change the place or currency of payment on a note;
. impair the right to institute suit for the enforcement of any payment on any
note;
. modify our obligation to maintain an office or agency in New York City;
. modify the subordination provisions in a manner that is adverse to the
holders of the notes;
. adversely affect the right to convert the notes;
. modify our obligation to deliver information required under Rule 144A to
permit resales of the notes and common stock issued upon conversion of the
notes if we cease to be subject to the reporting requirements under the
Exchange Act;
. reduce the above-stated percentage of holders whose consent is needed to
modify or amend the Indenture;
. reduce the percentage of holders whose consent is needed to waive compliance
with certain provisions of the Indenture or to waive certain defaults; or
. reduce the percentage required for the adoption of a resolution or the quorum
required at any meeting of holders of notes at which a resolution is adopted.
The holders of a majority in aggregate principal amount of the outstanding
notes may waive compliance by us 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 by written consent any past default under the Indenture, except a
default in the payment of principal, premium, if any, or interest.
Notices
Notice to holders of the registered notes will be given by mail to the
addresses as they appear in the security register. Notices will be deemed to
have been given on the date of such mailing.
Notice of a redemption of notes will be given not less than 30 nor more than
60 days prior to the redemption date and will specify the redemption date. A
notice of redemption of the notes will be irrevocable.
Replacement of Notes
We will replace any note that becomes mutilated, destroyed, stolen or lost at
the expense of the holder upon delivery to the Trustee of the mutilated notes or
evidence of the loss, theft or destruction satisfactory to us and the Trustee.
In the case of a lost, stolen or destroyed note, indemnity satisfactory to the
Trustee and us may be required at the expense of the holder of the note before a
replacement note will be issued.
33
<PAGE>
Payment of Stamp and Other Taxes
We will pay all stamp and other duties, if any, which may be imposed by the
United States or any political subdivision thereof or taxing authority thereof
or therein with respect to the issuance of the notes. We will not be required to
make any payment with respect to any other tax, assessment or governmental
charge imposed by any government or any political subdivision thereof or taxing
authority thereof or therein.
Governing Law
The Indenture and the notes will be governed by and construed in accordance
with the laws of the State of New York, United States of America.
The Trustee
If an Event of Default occurs and is continuing, 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.
34
<PAGE>
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 $550,000,000 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 selling securityholders to
the public in accordance with the terms of a registration rights agreement
between us and the initial purchasers of the notes. We have registered the
notes and shares for sale pursuant to the terms of this registration rights
agreement, but registration of the notes and shares does not necessarily mean
that any of the notes and shares will be offered and sold by the entities that
hold them.
We will not receive any proceeds from the offering by the selling
securityholders. The notes and shares 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 notes and shares through
dealers or agents, who may receive compensation in the form of commissions from
the selling securityholders and/or the purchasers of notes and shares for whom
they may act as agent. The selling securityholders and any dealers or agents
that participate in the distribution of notes and shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 and any profit
on the sale of notes and shares by them and any commissions received by any such
dealers or agents might be deemed to be underwriting commissions under the
Securities Act of 1933.
At a time a particular offer of notes or shares 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 notes and shares 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 notes and shares may be sold only through registered or licensed brokers or
dealers. In addition, in certain states, the notes and shares 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 notes and shares 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 notes or shares 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
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended January 31, 1999, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements and schedule are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
LEGAL MATTERS
The validity of the issuance of the shares of 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 who perform
substantive services for BEA own an aggregate of approximately 26,000 shares of
Common Stock of the Company.
35
<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.
<TABLE>
<CAPTION>
<S> <C>
Securities Act Registration Fee..................................$ 145,200
Printing and duplicating fees.................................... 10,000
Legal fees and expenses.......................................... 20,000
Accounting fees and expenses..................................... 50,000
Miscellaneous expenses........................................... 10,800
-----------
*Total..........................................................$ 236,000
===========
* None of the expenses listed above will be borne by the selling
securityholders.
</TABLE>
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.
II-1
<PAGE>
<TABLE>
<CAPTION>
Item 16. Exhibits
<S> <C>
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 and form of Amendment No. 1 thereto
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
</TABLE>
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
<PAGE>
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.
II-3
<PAGE>
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 San Jose, State of California on March 13, 2000.
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
William M. Klein 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 offered notes and 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 March 13, 2000
- ----------------------------------- Board and Director (Principal Executive Officer)
William T. Coleman III
/s/ William M. Klein
- ----------------------------------- Chief Financial Officer (Principal Financial and March 13, 2000
William M. Klein Accounting Officer)
/s/ Carol A. Bartz
- ----------------------------------- Director March 13, 2000
Carol A. Bartz
/s/ Cary J. Davis
- ----------------------------------- Director March 13, 2000
Cary J. Davis
- ----------------------------------- Director March __, 2000
Stewart K.P. Gross
/s/ William H. Janeway
- ----------------------------------- Director March 13, 2000
William H. Janeway
/s/ Dean O. Morton
- ------------------------------------ Director March 13, 2000
Dean O. Morton
- ------------------------------------ Director March __, 2000
Robert L. Joss
</TABLE>
II-4
<PAGE>
EXHIBIT 4.3
____________________________________
BEA SYSTEMS, INC.
ISSUER
TO
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
TRUSTEE
__________________
INDENTURE
Dated as of December 15, 1999
___________________
4% CONVERTIBLE SUBORDINATED NOTES DUE DECEMBER 15, 2006
_______________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
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.......................... 11
SECTION 1.5 Notices, Etc to the Trustee and Company................ 13
SECTION 1.6 Notice to Holders of Securities; Waiver................ 14
SECTION 1.7 Effect of Headings and Table of Contents............... 14
SECTION 1.8 Successors and Assigns................................. 14
SECTION 1.9 Separability Clause.................................... 14
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...................... 15
ARTICLE II SECURITY FORMS.................................................. 16
SECTION 2.1 Form Generally......................................... 16
SECTION 2.2 Form of Security....................................... 16
SECTION 2.3 Form of Certificate of Authentication.................. 29
SECTION 2.4 Form of Conversion Notice.............................. 30
SECTION 2.5 Form of Assignment..................................... 31
ARTICLE III THE SECURITIES................................................. 32
SECTION 3.1 Title and Terms........................................ 32
SECTION 3.2 Denominations.......................................... 32
SECTION 3.3 Execution, Authentication, Delivery and Dating......... 33
SECTION 3.4 Global Securities; Non-global Securities; Book-entry
Provisions............................................. 33
SECTION 3.5 Registration; Registration of Transfer and Exchange;
Restrictions on Transfer............................... 35
SECTION 3.6 Mutilated, Destroyed, Lost or Stolen Securities........ 38
SECTION 3.7 Payment of Interest; Interest Rights Preserved......... 39
SECTION 3.8 Persons Deemed Owners.................................. 40
SECTION 3.9 Cancellation........................................... 40
SECTION 3.10 Computation of Interest................................ 40
SECTION 3.11 CUSIP Numbers.......................................... 41
ARTICLE IV SATISFACTION AND DISCHARGE...................................... 41
SECTION 4.1 Satisfaction And Discharge of Indenture................ 41
SECTION 4.2 Application of Trust Money............................. 42
ARTICLE V REMEDIES......................................................... 43
</TABLE>
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(continued)
<TABLE>
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<S> <C>
SECTION 5.1 Events of Default............................................................. 43
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment............................ 44
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee............... 45
SECTION 5.4 Trustee May File Proofs of Claim.............................................. 46
SECTION 5.5 Trustee May Enforce Claims Without Possession of Securities................... 47
SECTION 5.6 Application of Money Collected................................................ 47
SECTION 5.7 Limitation on Suits........................................................... 47
SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium and Interest
and to Convert................................................................ 48
SECTION 5.9 Restoration of Rights and Remedies............................................ 48
SECTION 5.10 Rights and Remedies Cumulative................................................ 48
SECTION 5.11 Delay or Omission Not Waiver.................................................. 49
SECTION 5.12 Control by Holders of Securities.............................................. 49
SECTION 5.13 Waiver of Past Defaults....................................................... 49
SECTION 5.14 Undertaking for Costs......................................................... 49
SECTION 5.15 Waiver of Stay, Usury or Extension Laws....................................... 50
ARTICLE VI THE TRUSTEE............................................................................ 50
SECTION 6.1 Certain Duties and Responsibilities........................................... 50
SECTION 6.2 Notice of Defaults............................................................ 51
SECTION 6.3 Certain Rights of Trustee..................................................... 52
SECTION 6.4 Not Responsible for Recitals or Issuance of Securities........................ 53
SECTION 6.5 May Hold Securities, Act as Trustee under Other Indentures.................... 53
SECTION 6.6 Money Held in Trust........................................................... 53
SECTION 6.7 Compensation and Reimbursement................................................ 53
SECTION 6.8 Corporate Trustee Required; Eligibility....................................... 54
SECTION 6.9 Resignation and Removal; Appointment of Successor............................. 54
SECTION 6.10 Acceptance of Appointment by Successor........................................ 55
SECTION 6.11 Merger, Conversion, Consolidation or Succession to Business................... 56
SECTION 6.12 Authenticating Agents......................................................... 56
SECTION 6.13 Disqualification; Conflicting Interests....................................... 57
SECTION 6.14 Preferential Collection of Claims Against Company............................. 57
ARTICLE VII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.................................. 58
SECTION 7.1 Company May Consolidate, Etc,................................................. 58
SECTION 7.2 Successor Substituted......................................................... 58
ARTICLE VIII SUPPLEMENTAL INDENTURES.............................................................. 59
SECTION 8.1 Supplemental Indentures Without Consent of Holders of Securities.............. 59
</TABLE>
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(continued)
<TABLE>
<CAPTION>
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<S> <C>
SECTION 8.2 Supplemental Indentures with Consent of Holders of Securities................. 60
SECTION 8.3 Execution of Supplemental Indentures.......................................... 61
SECTION 8.4 Effect of Supplemental Indentures............................................. 61
SECTION 8.5 Reference in Securities to Supplemental Indentures............................ 61
SECTION 8.6 Notice of Supplemental Indentures............................................. 61
ARTICLE IX MEETINGS OF HOLDERS OF SECURITIES...................................................... 62
SECTION 9.1 Purposes for Which Meetings May Be Called..................................... 62
SECTION 9.2 Call, Notice and Place of Meetings............................................ 62
SECTION 9.3 Persons Entitled to Vote at Meetings.......................................... 62
SECTION 9.4 Quorum; Action................................................................ 62
SECTION 9.5 Determination of Voting Rights; Conduct and Adjournment of Meetings........... 63
SECTION 9.6 Counting Votes and Recording Action of Meetings............................... 64
ARTICLE X COVENANTS............................................................................... 64
SECTION 10.1 Payment of Principal, Premium and Interest.................................... 64
SECTION 10.2 Maintenance of Offices or Agencies............................................ 65
SECTION 10.3 Money for Security Payments to Be Held in Trust............................... 65
SECTION 10.4 Existence..................................................................... 66
SECTION 10.5 Maintenance of Properties..................................................... 67
SECTION 10.6 Payment of Taxes and Other Claims............................................. 67
SECTION 10.7 Registration and Listing...................................................... 67
SECTION 10.8 Statement by Officers as to Default........................................... 67
SECTION 10.9 Delivery of Certain Information............................................... 68
SECTION 10.10 Resale of Certain Securities.................................................. 68
SECTION 10.11 Registration Rights........................................................... 69
SECTION 10.12 Waiver of Certain Covenants................................................... 70
ARTICLE XI REDEMPTION OF SECURITIES............................................................... 71
SECTION 11.1 Right of Redemption........................................................... 71
SECTION 11.2 Applicability of Article...................................................... 71
SECTION 11.3 Election to Redeem; Notice to Trustee......................................... 71
SECTION 11.4 Selection by Trustee of Securities to Be Redeemed............................. 71
SECTION 11.5 Notice of Redemption.......................................................... 72
SECTION 11.6 Deposit of Redemption Price................................................... 72
SECTION 11.7 Securities Payable on Redemption Date......................................... 73
SECTION 11.8 Conversion Arrangement on Call for Redemption................................. 73
ARTICLE XII CONVERSION OF SECURITIES.............................................................. 74
</TABLE>
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(continued)
<TABLE>
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<S> <C>
SECTION 12.1 Conversion Privilege and Conversion Rate...................................... 74
SECTION 12.2 Exercise of Conversion Privilege.............................................. 75
SECTION 12.3 Fractions of Shares........................................................... 76
SECTION 12.4 Adjustment of Conversion Rate................................................. 76
SECTION 12.5 Notice of Adjustments of Conversion Rate...................................... 81
SECTION 12.6 Notice of Certain Corporate Action............................................ 81
SECTION 12.7 Company to Reserve Common Stock............................................... 82
SECTION 12.8 Taxes on Conversions.......................................................... 82
SECTION 12.9 Covenant as to Common Stock................................................... 83
SECTION 12.10 Cancellation of Converted Securities.......................................... 83
SECTION 12.11 Provision in Case of Consolidation, Merger or Sale of Assets.................. 83
SECTION 12.12 Rights Issued in Respect of Common Stock...................................... 84
SECTION 12.13 Responsibility of Trustee for Conversion Provisions........................... 85
ARTICLE XIII SUBORDINATION OF SECURITIES.......................................................... 85
SECTION 13.1 Securities Subordinate to Senior Debt......................................... 85
SECTION 13.2 No Payment in Certain Circumstances, Payment over of Proceeds upon
Dissolution, Etc.............................................................. 85
SECTION 13.3 Prior Payment to Senior Debt upon Acceleration of Securities.................. 87
SECTION 13.4 Payment Permitted If No Default............................................... 88
SECTION 13.5 Subrogation to Rights of Holders of Senior Debt............................... 88
SECTION 13.6 Provisions Solely to Define Relative Rights................................... 88
SECTION 13.7 Trustee to Effectuate Subordination........................................... 88
SECTION 13.8 No Waiver of Subordination Provisions......................................... 89
SECTION 13.9 Notice to Trustee............................................................. 89
SECTION 13.10 Reliance on Judicial Order or Certificate of Liquidating Agent................ 90
SECTION 13.11 Trustee Not Fiduciary for Holders of Senior Debt.............................. 90
SECTION 13.12 Reliance by Holders of Senior Debt on Subordination Provisions................ 90
SECTION 13.13 Rights of Trustee as Holder of Senior Debt; Preservation of Trustee's Rights.. 91
SECTION 13.14 Article Applicable to Paying Agents........................................... 91
SECTION 13.15 Certain Conversions and Repurchases Deemed Payment............................ 91
ARTICLE XIV REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER UPON A CHANGE IN CONTROL......... 92
SECTION 14.1 Right to Require Repurchase................................................... 92
SECTION 14.2 Conditions to the Company's Election to Pay the Repurchase
Price in Common Stock......................................................... 92
SECTION 14.3 Notices; Method of Exercising Repurchase Right, Etc........................... 93
</TABLE>
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TABLE OF CONTENTS
(continued)
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SECTION 14.4 Certain Definitions........................................................... 96
SECTION 14.5 Consolidation, Merger, etc.................................................... 97
ARTICLE XV HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY; NON-RECOURSE......................... 98
SECTION 15.1 Company to Furnish Trustee Names and Addresses of Holders..................... 98
SECTION 15.2 Preservation of Information................................................... 98
SECTION 15.3 Reserved...................................................................... 98
SECTION 15.4 Reports by Trustee............................................................ 98
SECTION 15.5 Reports by Company............................................................ 99
ARTICLE XVI IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS....................... 99
SECTION 16.1 Indenture and Securities Solely Corporate Obligations......................... 99
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INDENTURE, dated as of December 15, 1999, between BEA SYSTEMS, INC., a
corporation duly organized and existing under the laws of the State of Delaware,
having its principal office at 2315 North First Street, San Jose, California
95131 (herein called the "Company"), and STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., a national banking association organized under the laws of the
United States, 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 December 15, 2006 (herein called the
"Securities") of substantially the tenor and amount hereinafter set forth, and
to provide therefor the Company has duly authorized the execution and delivery
of this Indenture.
All things necessary to make the Securities, when the Securities are
executed by the Company and authenticated and delivered hereunder, the valid
obligations of the Company, and to make this Indenture a valid agreement of the
Company, in accordance with their and its terms, have been done. Further, all
things necessary to duly authorize the issuance of the Common Stock of the
Company issuable upon the conversion of the Securities, and to duly reserve for
issuance the number of shares of Common Stock issuable upon such conversion,
have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 Definitions.
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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
prices regular way, in either case, on the principal national securities
exchange on which the
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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.
"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.
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"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
December 15, 2006)).
"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 Debt in which the instrument creating or evidencing the same
or the assumption or guarantee thereof (or related agreements or documents to
which the Company is a party) expressly provides that such Senior Debt shall be
"Designated Senior Debt" for purposes of this Indenture (provided that such
instrument, agreement or other document may place limitations and conditions on
the right of such Senior Debt to exercise the rights of Designated Senior Debt).
"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.
"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.
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"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., Credit Suisse First Boston
Corp., SoundView Financial Group, Inc., Deutsche Banc Alex. Brown, SG Cowen and
Dain Rauscher Incorporated.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Issue Date" means December 20, 1999.
"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. One of the Officers signing an Officers' Certificate given pursuant to
Section 10.8 shall be the principal executive, financial or accounting officer
of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company and who shall be acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(i) Securities theretofore 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
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(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.
"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
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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 December 14,
1999, 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 December 15, 1999, 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 Debt or (b) with respect to any Senior Debt that
does not have any such trustee, agent or other representative, (i) in the case
of such Senior Debt issued pursuant to an agreement providing for voting
arrangements as among the holders or owners of such Senior Debt, any holder or
owner of such Senior Debt acting with the consent of the required persons
necessary to bind such holders or owners of such Senior Debt and (ii) in the
case of all other such Senior Debt, the holder or owner of such Senior Debt.
"Repurchase Date" has the meaning specified in Section 14.1.
"Repurchase Price" has the meaning specified in Section 14.1.
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"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 Debt" means the principal of (and premium, if any) and interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on, and all fees and
other amounts payable in connection with, the following, whether absolute or
contingent, secured or unsecured, due or to become due, outstanding on the date
of this Indenture or thereafter created, incurred or assumed: (a) 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 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
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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 Debt shall not
include the Securities, the Company's 4% Convertible Notes due June 15, 2005 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.
"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.
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"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.
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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 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;
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(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.
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
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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, 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
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<PAGE>
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.
SECTION 1.5 Notices, Etc to the 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 December 15, 2006).
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<PAGE>
(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 2315 North First Street, San
Jose, California 95131, 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.
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.
-------------------
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<PAGE>
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 Debt.
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
Redemption Price or Repurchase Price (whether the same is payable in cash or in
shares of Common Stock in the case of the Repurchase Price) with respect to, or
delivery for conversion of, such Security need not be made at such Place of
Payment or Place of Conversion, as the case may be, on or by such day, but may
be made on or by the next succeeding Business Day at such Place of Payment or
Place of Conversion, as the case may be, with the same force and effect as if
made on the Interest Payment Date, Redemption Date or Repurchase Date, or at
the Stated Maturity or by such last day for conversion; provided, however, that
in the case that payment is made on such succeeding Business Day, no interest
shall accrue on the amount so payable for the period from and after such
Interest Payment Date, Redemption Date, Repurchase Date, Stated Maturity or last
day for conversion, as the case may be.
SECTION 1.13 Conflict With Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Until such time as this Indenture shall be qualified under the Trust Indenture
Act, this Indenture, the Company and the Trustee shall
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<PAGE>
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.
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.
----------------
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<PAGE>
[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) PURSUANT TO THE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (III) TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT THAT PRIOR TO SUCH TRANSFER PROVIDES TO THE
TRUSTEE FOR THE SECURITIES A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITIES (THE
FORM OF SUCH LETTER CAN BE OBTAINED FROM THE TRUSTEE OF THE SECURITIES) AND, IF
SUCH TRANSFER IS FOR LESS THAN AN AGGREGATE PRINCIPAL AMOUNT OF $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, IF REQUESTED BY THE COMPANY, THAT
THE TRANSFER IS EXEMPT FROM REGISTRATION, (IV) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) (AND BASED ON AN OPINION OF
LEGAL COUNSEL AVAILABLE TO THE COMPANY OR (V) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND IN EACH OF CASES (I)
THROUGH (V) 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
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<PAGE>
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 DECEMBER 15, 2006
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 $450,000,000 (or $550,000,000 if the Over-allotment
Option is exercised in full) in the aggregate at any time) by adjustments made
on the records of the Trustee hereinafter referred to in accordance with the
Indenture)] on December 15, 2006 and to pay interest thereon, from December 20,
1999, or from the most recent Interest Payment Date (as defined below) to which
interest has been paid or duly provided for, semi-annually in arrears on June 15
and December 15 in each year (each, an "Interest Payment Date"), commencing June
15, 2000, 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
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<PAGE>
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). 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 December 15,
2006" (herein called the "Securities"), limited in aggregate principal amount to
U.S. $450,000,000 (or $550,000,000 if the Over-allotment Option is exercised in
full), issued and to be issued under an Indenture, dated as of December 15, 1999
(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 Debt and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. As provided in the Indenture and
subject to certain limitations therein set forth, 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 December 20, 2002 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 December 20, 2002 and ending on December 14, 2004
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 December 15 (December 20, 2002 through December 14, 2003 in the case
of the first such period:
YEAR REDEMPTION PRICE
------------ ----------------------
2002 102.286%
2003 101.714
2004 101.143
2005 100.571
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.
<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 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 7.215
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 portion hereof has been called for redemption
on a Redemption Date or is repurchasable on a
<PAGE>
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
<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 December 15, 1999, 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)
<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.]
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
<PAGE>
Debt of the Company, and this Security is issued subject to such provisions of
the Indenture with respect thereto. Each Holder of this Security, by accepting
the same, (a) agrees to and shall be bound by such 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:
<TABLE>
<S> <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 survivorship under Uniform Gifts to
and not as tenants in common Minors Act _______
(State)
</TABLE>
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. $1,000 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:__________
<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)
_____________________________________________
Social Security or other Identification
Number, if any
<PAGE>
_____________________________________________
[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
<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. $450,000,000 (or $550,000,000
if the Over-allotment Option set forth in Section 2 of the Purchase Agreement is
exercised in full (the "Over-allotment Option")), 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 December 15, 2006" of the Company. Their Stated Maturity
shall be December 15, 2006 and they shall bear interest on their principal
amount from December 20, 1999, payable semi-annually in arrears on June 15 and
December 15 in each year, commencing June 15, 2000, 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 December 20, 2002, 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 Debt 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.
SECTION 3.2 Denominations.
-------------
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
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
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).
<PAGE>
(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;
(v) a new Security which does not bear a Restricted Securities
Legend may be issued in exchange for or in lieu of a 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
<PAGE>
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 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.
<PAGE>
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 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
<PAGE>
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 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.
-----------------------
<PAGE>
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
(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
<PAGE>
(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.
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).
<PAGE>
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
(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
<PAGE>
(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.
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
<PAGE>
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.
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.
<PAGE>
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,
(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;
<PAGE>
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;
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;
<PAGE>
(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 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
<PAGE>
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
(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.
---------------------
<PAGE>
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
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.
<PAGE>
(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 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,
<PAGE>
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;
(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.
<PAGE>
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.
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
<PAGE>
(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.
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.
<PAGE>
(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,
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
<PAGE>
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.
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,
<PAGE>
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.12, the Trustee may appoint a successor
Authenticating Agent which shall be subject to acceptance by the Company. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its 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.
-------------------------------------------------
<PAGE>
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).
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.
---------------------
<PAGE>
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.
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 Debt
under such Article; or
<PAGE>
(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.
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
<PAGE>
(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
(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
<PAGE>
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.
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.
--------------
<PAGE>
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. 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
<PAGE>
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 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
<PAGE>
of any Security or no later than the opening of business on the due date for any
installment of interest, all payments so due, which payments shall be in
immediately available funds on the date of such Stated Maturity or due date, as
the case may be.
SECTION 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 December 15, 2006) as 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 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.
<PAGE>
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; 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.
<PAGE>
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 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.
-----------------------------------
<PAGE>
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).
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.
<PAGE>
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 December 1, 1999 (the "Registration Rights
Agreement"), executed by the Company. Pursuant to the Registration Rights
Agreement, the Company has agreed for the benefit of the holders from time to
time of the Registrable Securities that it will, at its expense, (i) within 90
calendar 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 calendar 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 calendar 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 calendar 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 calendar 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
calendar 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 on the 61st calendar 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
<PAGE>
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.
If Liquidated Damages are payable under the Registration Rights Agreement,
the Company shall deliver to the Trustee a certificate to that effect stating
(i) the amount of Liquidated Damages that is payable and (ii) the date on which
Liquidated Damages is payable. Unless and until a Responsible Officer of the
Trustee receives at the Corporate Trust Office such a certificate, the Trustee
may assume without inquiry that no Liquidated Damages are payable. If
Liquidated Damages have been paid by the Company directly to the persons
entitled to them, the Company shall deliver to the Trustee a certificate setting
forth the particulars of such payment.
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 respect 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, 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
<PAGE>
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.
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.
<PAGE>
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.
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)
<PAGE>
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.
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
<PAGE>
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 the initial issuance date of the Securities and expire
at the close of business on the date of Maturity, subject, in the case of
conversion of any Global Security, to any Applicable Procedures. In case a
Security or portion thereof is called for redemption at the election of the
Company or the Holder thereof exercises his right to require the Company to
repurchase the Security, such conversion right in respect of the Security, or
portion thereof so called, shall expire at the close of business on the
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).
<PAGE>
The rate at which shares of Common Stock shall be delivered upon conversion
(herein called the "Conversion Rate") shall be initially 7.215 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.
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.
<PAGE>
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 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:
<PAGE>
(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
(including the Announced Split, as hereinafter defined), 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 (except in the case of the Announced Split, which shall be that
Conversion Rate in effect at the opening of business on December 20, 1999) 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 (or in the case of the Announced Split, on December 20,
1999). 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. The
"Announced Split" shall be the two-for-one stock split in the form of a stock
dividend payable on December 19, 1999 to holders of Common Stock of the Company
of record as of November 19, 1999.
(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
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.
<PAGE>
(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.
(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 365-day period 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 365-day period 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
<PAGE>
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 365-day period 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 365-day period 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 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
<PAGE>
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 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
<PAGE>
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
(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:
<PAGE>
(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 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.
--------------------
<PAGE>
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.
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
<PAGE>
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). 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 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.
<PAGE>
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; 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 Debt.
-------------------------------------
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 Debt.
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:
<PAGE>
(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 Debt occurs and is continuing (or, in
the case of Senior Debt for which there is a period of grace, in the event of
such a default that continues beyond the period of grace, if any, specified in
the instrument or lease evidencing such Senior Debt) unless and until such
default shall have been cured or waived or shall have ceased to exist; or
(ii) 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.
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 Debt shall be entitled to receive payment in
full of all amounts due or to become due on or in respect of all Senior Debt 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 Debt
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.
<PAGE>
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 Debt 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 Debt remaining unpaid, to the extent necessary to pay all Senior Debt in
full, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt.
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 Debt 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 Debt 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 Debt has been paid in full in cash or other payment
satisfactory to the holders of Senior Debt 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 Debt of the acceleration.
<PAGE>
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
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 Debt.
-----------------------------------------------
Subject to the payment in full of all Senior Debt, the Holders of the
Securities shall be subrogated to the extent of the payments or distributions
made to the holders of such Senior Debt pursuant to the provisions of this
Article to the rights of the holders of such Senior Debt to receive payments and
distributions of cash, property and securities applicable to the Senior Debt
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 Debt 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 Debt by
Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Debt and the Holders of the Securities,
be deemed to be a payment or distribution by the Company to or on account of the
Senior Debt.
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 Debt 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 Debt 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 Debt; 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 Debt to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
SECTION 13.7 Trustee to Effectuate Subordination.
-----------------------------------
<PAGE>
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.
SECTION 13.8 No Waiver of Subordination Provisions.
-------------------------------------
No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company, or by any non-
compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without impairing
or releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt, do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt, or otherwise
amend or supplement in any manner Senior Debt or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any Person liable in any manner
for the collection of Senior Debt; and (iv) exercise or refrain from exercising
any rights against the Company and any other Person.
SECTION 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 Debt
(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.
<PAGE>
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 Debt (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 Debt (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 Debt to participate in any
payment or distribution pursuant to this Article, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Debt held by such Person, the extent to which such Person
is entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
SECTION 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 Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 13.11 Trustee Not Fiduciary for Holders of Senior Debt.
------------------------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Debt and shall not be liable to any such holders if it shall in good
faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or securities to which any holders
of Senior Debt shall be entitled by virtue of this Article or otherwise.
SECTION 13.12 Reliance by Holders of Senior Debt on Subordination Provisions.
--------------------------------------------------------------
Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Debt, whether such Senior Debt
was created or acquired before or after the issuance of the Securities, to
acquire and continue to hold, or to continue to hold, such Senior Debt and such
holder of Senior Debt shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Debt, and no
<PAGE>
amendment or modification of the provisions contained herein shall diminish the
rights of such holders of Senior Debt unless such holders shall have agreed in
writing thereto.
SECTION 13.13 Rights of Trustee as Holder of Senior Debt; Preservation of
-----------------------------------------------------------
Trustee's Rights.
- ----------------
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Debt which may at any time
be held by it, to the same extent as any other holder of Senior Debt, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7.
SECTION 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 or 14.3(7)), 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 Debt which may be outstanding at the time of issuance
or delivery of such securities to substantially the same extent as, or to a
greater extent than, the Securities are so subordinated as provided in this
Article. Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Debt and the Holders of the Securities,
the right, which is absolute and unconditional, of the Holder of any Security to
convert such Security in accordance with Article 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.
<PAGE>
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. $1,000 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.
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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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:
(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
<PAGE>
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 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 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
<PAGE>
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.
(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
<PAGE>
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 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.
<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:_________________________________
Name:
Title:
<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 DECEMBER 15, 2006 OF BEA
SYSTEMS, INC. (THE "SECURITIES")
Reference is made to the Indenture, dated as of December 15, 1999 (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. 073325 AC 6
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, to a institutional "accredited investor" within the
meaning of Rule 501(A)(1), (2), (3) or (7), or pursuant to another exemption
from registration under the Securities Act (if available) 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.
(3) INSTITUTIONAL ACCREDITED INVESTORS. If the transfer is to an
institutional investor that is an accredited investor within the meaning of Rule
501(A)(1), (2), (3) or (7) of Regulation D under the Securities Act, a signed
letter containing certain representations and agreements relating to the
restrictions on transfer of the Securities and, if such transfer is for less
than an aggregate principal amount of $250,000, an opinion of counsel acceptable
to the Company if requested by the Company, that the transfer is exempt from
registration, must be supplied to the Trustee prior to such transfer.
(4) TRANSFERS PURSUANT TO OTHER SECURITY ACT EXEMPTIONS. If the transfer
is being effected pursuant to a Security Act Exemption other than ones set forth
in (1) through (3) above, there shall be delivered to the Company an opinion of
counsel with respect to such holders.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers.
Dated: ___________
Print the name of the Undersigned, as such term is defined in the
second paragraph of this certificate.)
-2-
<PAGE>
By:_____________________________
Name:___________________________
Title:__________________________
(If the Undersigned is a corporation, partnership or fiduciary, the title of the
person signing on behalf of the Undersigned must be stated.)
-3-
<PAGE>
ANNEX B -- Form of Unrestricted Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Restricted Securities Legend pursuant to Section 3.5(3))
State Street Bank and Trust Company of California, N.A.
Library Tower
633 West 5th Street - 12th Floor
Los Angeles, CA 90071
RE: 4% CONVERTIBLE SUBORDINATED NOTES DUE DECEMBER 15, 2006 OF BEA
SYSTEMS, INC. (THE "SECURITIES")
Reference is made to the Indenture, dated as of December 15, 1999
(the "Indenture"), from BEA Systems, Inc. (the "Company") to State Street Bank
and Trust Company of California, N.A., as Trustee. Terms used herein and defined
in the Indenture or in Rule 144 under the U.S. Securities Act of 1933 (the
"Securities Act") are used herein as so defined.
This certificate relates to U.S.$_______________ principal amount
of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No. 073325 AD 4
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 DECEMBER 15, 2006
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 144A
under the Securities Act; or
_________ 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 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 and a signed letter containing certain
representations and agreements relating to restrictions on transfer
of the Securities (and if such transfer is for an aggregate
principal amount less than $250,000, an opinion of counsel
acceptable to the Company if requested by the Company, that such
transfer is exempt from registration; or
_________ The transfer of the Surrendered Securities has been made pursuant to
an exemption from registration under the Securities Act and an
opinion of counsel has been delivered to the Company with respect to
such transfer.
[to come]
<PAGE>
[Name of Holder]
Dated:________________________________
*To be dated the date of surrender
-2-
<PAGE>
EXHIBIT 4.4
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) PURSUANT TO THE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (III) TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT THAT PRIOR TO SUCH TRANSFER PROVIDES TO THE
TRUSTEE FOR THE SECURITIES A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITIES (THE
FORM OF SUCH LETTER CAN BE OBTAINED FROM THE TRUSTEE OF THE SECURITIES) AND, IF
SUCH TRANSFER IS FOR LESS THAN AN AGGREGATE PRINCIPAL AMOUNT OF $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, IF REQUESTED BY THE COMPANY, THAT
THE TRANSFER IS EXEMPT FROM REGISTRATION, (IV) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) (AND BASED ON AN OPINION OF
LEGAL COUNSEL AVAILABLE TO THE COMPANY OR (V) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND IN EACH OF CASES (I)
THROUGH (V) 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
<PAGE>
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.
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>
BEA SYSTEMS, INC.
4% CONVERTIBLE SUBORDINATED NOTE DUE DECEMBER 15, 2006
No. R-1 $400,000,000
CUSIP NO. 073325AC6
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 Four Hundred Million United States Dollars (U.S.$400,000,000)
(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 $450,000,000 (or $550,000,000 if
the Over-allotment Option is exercised in full) in the aggregate at any time) by
adjustments made on the records of the Trustee hereinafter referred to in
accordance with the Indenture) on December 15, 2006 and to pay interest thereon,
from December 20, 1999, or from the most recent Interest Payment Date (as
defined below) to which interest has been paid or duly provided for, semi-
annually in arrears on June 15 and December 15 in each year (each, an "Interest
Payment Date"), commencing June 15, 2000, 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 15 days prior to the relevant payment date). Payment of interest
on this Security
<PAGE>
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: Chief Executive Officer
Attest:
By:______________________________
Name: Steve Brown
Title: Chief Financial Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
Dated: December 20, 1999
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 December 15,
2006" (herein called the "Securities"), limited in aggregate principal amount to
U.S. $450,000,000 (or $550,000,000 if the Over-allotment Option is exercised in
full), issued and to be issued under an Indenture, dated as of December 15, 1999
(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 Debt and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. As provided in the Indenture and
subject to certain limitations therein set forth, 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 December 20, 2002 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 December 20, 2002 and ending on December 14, 2004
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 December 15 (December 20, 2002 through December 14, 2003
in the case of the first such period:
YEAR REDEMPTION PRICE
-------------- -----------------------
2002 102.286%
2003 101.714
2004 101.143
2005 100.571
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.
<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 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 7.215
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 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
<PAGE>
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 (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 December 15, 1999, executed by the Company (the
"Registration Rights
<PAGE>
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) 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
<PAGE>
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 Debt of the Company, and this
Security is issued subject to such provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such 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.
<PAGE>
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.
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
<PAGE>
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:
<TABLE>
<S> <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 survivorship under Uniform Gifts to
and not as tenants in common Minors Act _______
(State)
</TABLE>
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. $1,000 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>
EXHIBIT 4.5
BEA Systems, Inc.
4% Convertible Subordinated Notes due December 15, 2006
Purchase Agreement
December 14, 1999
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Soundview Technology Group, Inc.
Deutsche Bank Securities, Inc.
SG Cowen Securities Corporation
Dain Rauscher Incorporated
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
$450,000,000 principal amount of the 4% Convertible Subordinated Notes due
December 15, 2006, 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 $100,000,000 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"). The
Purchasers and their direct and indirect transferees will be entitled to the
benefits of a registration rights agreement to be dated as of December 15, 1999
between the Company and the Purchasers (the "Registration Rights Agreement"),
which will be substantially in the form previously delivered to you.
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) A preliminary offering circular, dated December 13, 1999
(the "Preliminary Offering Circular") and an offering circular, dated December
14, 1999 (the "Offering Circular"), including in each case the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1999 and the Company's
Quarterly Reports on Form 10-Q for the quarters ended April 30, July 31 and
October 31, 1999, each of 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
<PAGE>
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 documents filed with the United States Securities and Exchange Commission
(the "Commission") subsequent to the the date of filing thereof 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 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
-2-
<PAGE>
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 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 December 15, 1999 (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; the
Registration Rights Agreement has been duly authorized and, when executed and
delivered by the Company and the Purchasers, the Registration Rights Agreement
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, the Registration Rights Agreement and the Indenture will conform to
the descriptions thereof in the Offering Circular and will be in substantially
the form previously delivered to you;
-3-
<PAGE>
(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, the
Registration Rights Agreement and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or result in
a breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Securities or the consummation by the
Company of the transactions contemplated by this Agreement, the Registration
Rights Agreement or the Indenture, except 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 the 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
-4-
<PAGE>
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. Except as disclosed in the Offering Circular, no legal or
beneficial owner of any securities of the Company has any rights not effectively
satisfied or waived, to require registration of any shares of capital stock of
the Company in connection with any filing made pursuant to the Registration
Rights Agreement;
(n) The Company is subject to Section 13 or 15(d) of the
Exchange Act;
(o) The Company is not, and after giving effect to the offering
and sale of the Securities, will not be an "investment company", 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.
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(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 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 Environmental 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;
(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; and
(x) The Company has reviewed its operations and that of its
subsidiaries and has made inquiries of the operations of any third parties with
which the Company or any of its subsidiaries has a material relationship to
evaluate the extent to which the business or operations of the Company or any of
its subsidiaries will be affected by the Year 2000 Problem. As a result of such
review, the Company has no reason to believe, and does not believe, that the
Year 2000 Problem will have a material adverse effect on the general affairs,
management, the current or future consolidated financial position, business
prospects, stockholders' equity or results of operations of the Company and its
subsidiaries or result in any material loss or interference with the Company's
business or operations or have a material adverse effect on the power or ability
of the Company to perform its obligations under this Agreement, the Registration
Rights Agreement, the Indenture or
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the Securities or to consummate the transactions contemplated by the Offering
Circular or by the terms of any of the foregoing. The "Year 2000 Problem" as
used herein means any significant risk that computer hardware or software used
in the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000.
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 December 20, 1999 to the First Time of Delivery, 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
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 $100,000,000 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;
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(b) It is an institution which is an "accredited investor"
within the meaning of Rule 501 under the Act; and
(c) It will not offer or sell the Securities by any form of
general solicitation or general advertising, including but not limited to the
methods described in Rule 502(c) under the 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 December 20, 1999 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 Time of
Delivery", and each such time and date for delivery is herein called a "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;
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(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;
(d) During the period beginning from the date hereof and
continuing until the date 90 days after the date of the Offering Circular, not
to offer, sell contract to sell or otherwise dispose of, except as provided
hereunder any securities of the Company that are substantially similar to the
Securities or the Stock, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to receive,
Stock or any such substantially similar securities (other than 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.
(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;
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(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 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 effected 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
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(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 Registration Rights
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, 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 the following clauses
of subsection (b) below, as well as such other related matters as you may
reasonably request: paragraph (i); the clauses of paragraph (ii) concerning
shares of Stock initially issuable upon conversion of the Securities; paragraph
(vii); paragraph (viii); paragraph (ix); the clauses of paragraph (xiii)
concerning the captions "Description of Notes" and "Underwriting"; and paragraph
(xv). Such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
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(b) 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 corporate power and corporate authority 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 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
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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, the Registration Rights Agreement and the
Indenture conform in all material respects to the descriptions thereof in the
Offering Circular.
(ix) Each of the Indenture and the Registration
Rights Agreement 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, the Registration Rights
Agreement and this Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument 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
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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, the Registration Rights 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 the 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 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, it being understood that no opinion is being expressed as to any
subsequent resale of the Securities;
(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
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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, there
is no legal or beneficial owner of any securities of the Company who has any
rights, not effectively satisfied or waived, to require registration of any
shares of capital stock of the Company in connection with the filing of the
registration statement on Form S-3 pursuant to the terms of the Registration
Rights Agreement; and
(xix) 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.
(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, 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
-15-
<PAGE>
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
(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.
(j) The Company and the Purchasers shall have executed and
delivered the Registration Rights Agreement.
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
-16-
<PAGE>
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
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
-17-
<PAGE>
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 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
-18-
<PAGE>
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) 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.
-19-
<PAGE>
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.,
32 Old Slip, 21/st/ Floor, New York, New York 10005, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the Offering
Circular, 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 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.
-20-
<PAGE>
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.
-21-
<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: ____________________________
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Soundview Technology Group, Inc.
Deutsche Bank Securities, Inc.
SG Cowen Securities Corporation
Dain Rauscher Incorporated
By: ________________________________
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
<PAGE>
SCHEDULE I
Principal Amount of Firm Securities and Optional Securities
To Be Purchased (If Maximum)
<TABLE>
<CAPTION>
Firm Securities Optional Securities
Purchaser To Be Purchased To Be Purchased
- -------------------------------------------------- ------------------ -----------------------
<S> <C> <C>
Goldman, Sachs & Co. $225,000,000 $ 50,000,000
Credit Suisse First Boston Corporation 67,500,000 15,000,000
Soundview Technology Group, Inc. 67,500,000 15,000,000
Deutsche Bank Securities, Inc 33,750,000 7,500,000
SG Cowen Securities Corporation 33,750,000 7,500,000
Dain Rauscher Incorporated 22,500,000 5,000,000
------------ ------------
Total $450,000,000 $100,000,000
============ ============
</TABLE>
<PAGE>
ANNEX I
Pursuant to Section 7(d) of the Purchase Agreement, the accountants shall
furnish letters to the Purchasers to the effect that:
1. 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.
2. 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;
3. 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;
4. 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 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
<PAGE>
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 from the date of the latest financial statements
included in the Offering Circular to the specified date referred to in Clause
(E) there were any decreases in consolidated net revenues or operating profit or
the total or per share amounts of consolidated net income or other items
specified by the 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
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.
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<PAGE>
AMENDMENT NO. 1 TO PURCHASE AGREEMENT
This Amendment No. 1 to Purchase Agreement (the "Amendment") is dated as of
December 14, 1999 and amends that certain Purchase Agreement dated as of
December 14, 1999 (the "Purchase Agreement") between BEA Systems, Inc., a
Delaware corporation (the "Company"), and the Purchasers, as defined therein.
WHEREAS, the Company and the Purchasers have entered into the Purchase
Agreement for the purpose of the Company's issuance and sale of the Securities,
as defined therein.
WHEREAS, the Company and the Purchasers desire to amend the Purchase
Agreement as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties agree as follows.
1. Amendment to Purchase Agreement
1.1 Schedule I to the Purchase Agreement is amended to read in its
entirety as set forth in Schedule I attached hereto, and, in
consequence, the defined term "Purchasers" in the Purchase
Agreement shall henceforth refer to all of the entities listed on
Schedule I hereto.
2. Except as explicitly amended hereby, the Purchase Agreement shall
remain in full force and effect.
3. Counterparts. This Amendment may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their authorized officers as of the day and year first above
written.
BEA Systems, Inc.
By: ________________________
Name:
Title:
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Soundview Technology Group, Inc.
Deutsche Bank Securities, Inc.
SG Cowen Securities Corporation
Dain Rauscher Incorporated
The Seidler Companies Incorporated
Jefferies & Company, Inc.
Prudential Securities Incorporated
By: ________________________
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
<PAGE>
SCHEDULE I
Principal Amount of Firm Securities and Optional Securities
To Be Purchased (If Maximum)
<TABLE>
<CAPTION>
Firm Securities Optional Securities
Purchaser To Be Purchased To Be Purchased
- ------------------------------------------ ------------------------------ -------------------------------
<S> <C> <C>
Goldman, Sachs & Co. $216,000,000 $48,000,000
Credit Suisse First Boston Corporation 64,800,000 14,400,000
Soundview Technology Group, Inc. 64,800,000 14,400,000
Deutsche Bank Securities, Inc. 32,400,000 7,200,000
SG Cowen Securities Corporation 32,400,000 7,200,000
Dain Rauscher Incorporated 21,600,000 4,800,000
The Seidler Companies Incorporated 9,000,000 2,000,000
Jefferies & Company, Inc. 4,500,000 1,000,000
Prudential Securities Incorporated 4,500,000 1,000,000
----------------------------- -------------------------------
Total $450,000,000 $100,000,000
============================= ===============================
</TABLE>
<PAGE>
EXHIBIT 4.6
BEA SYSTEMS, INC.
4% CONVERTIBLE SUBORDINATED NOTES
DUE DECEMBER 15, 2006
REGISTRATION RIGHTS AGREEMENT
Dated as of December 15, 1999
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
SoundView Technology Group, Inc.
Deutsche Bank Securities Inc.
SG Cowen Securities Corporation
Dain Rauscher Incorporated
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 December 15, 2006 (the "Securities"). As an inducement to the Purchasers
to enter into the Purchase Agreement and in satisfaction of a condition to the
obligations of the Purchasers thereunder, the Company agrees with the
Purchasers, 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 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.
<PAGE>
"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 December 15, 1999 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.
"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
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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 December 14, 1999
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.
"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
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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 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:
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<PAGE>
(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 time it intends in good faith to have the Shelf Registration
Statement declared effective. 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.
(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
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<PAGE>
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).
(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.
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<PAGE>
(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 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.
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<PAGE>
(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 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
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<PAGE>
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 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;
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<PAGE>
(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.
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
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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 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.
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(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 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
-12-
<PAGE>
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 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
-13-
<PAGE>
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 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.
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<PAGE>
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
(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
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<PAGE>
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: __________________________________
Name:
Title:
The foregoing Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written.
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
SoundView Technology Group, Inc.
Deutsche Bank Securities Inc.
SG Cowen Securities Corporation
Dain Rauscher Incorporated
By:__________________________________
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
-17-
<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 December 15, 2006 (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 December 15, 2006 (CUSIP No. 073325 AC 6) (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 December 15, 1999 (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: _________________________________________
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: ___________________________________________________
-2-
<PAGE>
(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-dealers or agents. Such Registrable
Securities may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at varying prices determined
at the time of sale, or at negotiated prices. Such sales may be effected
in transactions (which may involve crosses or block transactions) (i) on
any national securities exchanges or U.S. inter-dealer quotation system of
a registered national securities association on which the Registrable
Securities may be listed or quoted at the time of sale, (ii) in the over-
the-counter market, (iii) in transactions otherwise than on such exchanges
or services or in the over-the-counter market, or (iv) through the writing
of options. In connection with sales of the Registrable Securities or
otherwise, the Selling Securityholder may enter into hedging transactions
with broker-dealers, which may in turn engage in short sales of the
Registrable Securities in the course of hedging the positions they assume.
The Selling 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.
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
-3-
<PAGE>
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 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.
-4-
<PAGE>
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 December 15, 2006 (the "Notes")
Dear Sirs:
Please be advised that _________________________________ has transferred
$_____ aggregate principal amount of the above-referenced notes or ______ shares
of the Company's Common Stock, issued on conversion, repurchase or redemption of
Notes, pursuant to the Registration Statement Form S-3 (File No. 333-_________)
filed by the Company.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied with respect to the
transfer described above and that the above-named beneficial owner of the Notes
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
-----------
March 13, 2000
BEA Systems, Inc.
2315 North First Street
an Jose, CA 95131
Re: 4% Convertible Notes Due December 15, 2006
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 $550,000,000 principal amount of 4%
Convertible Notes due December 15, 2006 (the "Notes") and 7,936,500 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 December 15, 1999 (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 $550,000,000 of
Notes and up to 7,936,500 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,
<PAGE>
BEA Systems, Inc.
March 13, 2000
Page Two
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 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
<PAGE>
BEA Systems, Inc.
March 13, 2000
Page Three
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.
Based upon and subject to the foregoing, we are of the following opinions:
A. The Notes, assuming due authentication of the Notes by the
Trustee, constitute valid and binding obligations of the Company; and
B. 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
<PAGE>
EXHIBIT 12.1
BEA SYSTEMS, INC.
RATION OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Nine Months
Ended
October 31, Fiscal years ended January 31,
------------------ --------------------------------------------
1999 1999 1998 1997
------------------ ------------ -------------- --------------
<S> <C> <C> <C> <C>
Loss before income taxes............... $ 1,212 $(46,726) $ (20,068) $ (87,034)
Add fixed charges...................... 14,023 16,615 8,531 3,238
------------------ ------------ --------------- --------------
Earnings (as defined).................. $ 15,235 $ (30,111) $ (11,537) $ (78,796)
================== ============ =============== ==============
Fixed charges:
Interest expense..................... $ 7,563 $ 10,426 $ 6,054 $ 6,727
Portion of rent expense
representative of interest......... 5,617 5,528 2,477 1,511
Amortization of debt issuance costs.. 783 661 - -
------------------- ------------ -------------- --------------
Total fixed charges.............. $ 14,023 $ 16,615 $ 8,531 $ 8,238
================== ============ =============== ==============
Ratio of earnings to fixed charges..... 1.09 * * *
================== ============ =============== ==============
</TABLE>
* Earnings (as defined) were insufficient to cover fixed charges by $39,724,
$46,726, $20,068 and $87,034 for the nine-month period ended October 31, 1999,
and the fiscal years ended January 31, 1999, 1998 and 1997, respectively.
BEA Systems, Inc.-Confidential
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference of our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of BEA Systems, Inc.
for the registration of $550,000,000 of 4% Subordinate Notes due December 15,
2006 and 7,936,500 shares of its common stock and to the incorporation by
reference therein of our report dated February 23, 1999, with respect to the
consolidated financial statements and schedule of BEA Systems, Inc. included
in its Annual Report (Form 10-K) for the year ended January 31, 1999, filed
with the Securities and Exchange Commission.
Palo Alto, California
March 10, 2000
<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)
<TABLE>
<S> <C>
United States 06-1143380
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
</TABLE>
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)
<TABLE>
<S> <C>
Delaware 77-0394711
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
2315 North First Street, Suite 105, San Jose, CA 95131
(Address of principal executive offices) (Zip Code)
4% Convertible Subordinated Notes due 2006
(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 notes 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 an
Exhibit with corresponding exhibit number to the Form T-1of Western Digital
Corporation, filed pursuant to Section 305(b)(2) of the Trust Indenture Act
of 1939, as amended (the "Act"), on May 12, 1998 (Registration No. 333-
52463), and is 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 an Exhibit with
corresponding exhibit number 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 is 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 an Exhibit with
corresponding exhibit number 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 is 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, a national banking association, organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Los Angeles, and State of California, on the 11th
day of February, 2000.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, NATIONAL ASSOCIATION
By: /S/ Mark Henson
---------------
NAME: Mark Henson
TITLE: 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 4% Convertible Subordinated Notes, 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
---------------
NAME: Mark Henson
TITLE: Assistant Vice President
Dated: February 11, 2000
3
<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 December 31, 1999, 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:............................................. 4,987
Noninterest-bearing balances and currency and coin..................................... 0
Interest-bearing balances.............................................................. 37
Securities
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....................................................................... 34
Other real estate owned......................................................................... 0
Investments in unconsolidated subsidiaries...................................................... 0
Customers' liability to this bank on acceptances outstanding.................................... 0
Intangible assets............................................................................... 0
Other assets.................................................................................... 1,143
------------
Total assets.................................................................................... 6,201
============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
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............................................................................... 2,685
Total liabilities............................................................................... 2,685
------------
</TABLE>
<TABLE>
<CAPTION>
EQUITY CAPITAL
<S> <C>
Perpetual preferred stock and related surplus.................................................... 0
Common stock..................................................................................... 500
Surplus.......................................................................................... 750
Undivided profits and capital reserves/Net unrealized holding gains (losses)..................... 2,266
Cumulative foreign currency translation adjustments.............................................. 0
Total equity capital............................................................................. 3,516
------------
Total liabilities and equity capital............................................................. 6,201
============
</TABLE>
4
<PAGE>
I, John J. Saniuk, 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.
/s/ John J. Saniuk
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.
/s/ Alan D. Greene
/s/ Bryan R. Calder
/s/ Lynda A. Vogel
5
