AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 14, 2000
REGISTRATION NO. 333-____
============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
COMMSCOPE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-----------------
DELAWARE 13-4135495
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
1375 Lenoir-Rhyne Boulevard
Hickory, North Carolina 28601
(828) 323-2200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-----------------
Frank B. Wyatt, II, Esq.
Vice President, General Counsel and Secretary
COMMSCOPE, INC.
1375 Lenoir-Rhyne Boulevard
Hickory, North Carolina 28601
(828) 323-2200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
-----------------
COPIES TO:
Lois Herzeca, Esq.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
One New York Plaza
New York, New York 10004
(212) 859-8000
---------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
---------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED AGGREGATE PRICE PER NOTE AGGREGATE OFFERING PRICE REGISTRATION FEE
=================================================================================================================================
<S> <C> <C> <C> <C>
4% Convertible
Subordinated Notes $172,500,000 (1) 100% (2)(3) $172,500,000 (2) $45,540
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01
par value 3,579,581 (4) -- -- $--(5)
=================================================================================================================================
<FN>
(1) Represents the aggregate principal amount of the notes that were
originally issued by the Registrant.
(2) Estimated in accordance with Rule 457 of Regulation C under the
Securities Act of 1933, as amended, solely for the purpose of
determining the registration fee.
(3) Exclusive of accrued interest and distributions, if any.
(4) Represents the number of shares of common stock that are initially
issuable upon conversion of the notes and shall be deemed to register
an additional indeterminate number of shares of common stock issuable
upon conversion in the future pursuant to Rule 416 of the Securities
Act.
(5) No additional consideration will be received for the common stock and
therefore no registration fee is required pursuant to Rule 457(i).
</FN>
</TABLE>
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
===========================================================================
<PAGE>
[RED HERRING]
The information in this prospectus is not complete and may be changed. The
selling securityholders may not sell their securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell the securities and it is
not soliciting an offer to buy the securities in any state where the offer
or sale is not permitted.
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 14, 2000
PROSPECTUS
COMMSCOPE, INC.
$172,500,000 of 4% Convertible Subordinated Notes due 2006 and
3,579,581 Shares of Common Stock Issuable upon Conversion of the Notes
-----------------
This prospectus relates to 4% Convertible Subordinated Notes due
December 15, 2006 of CommScope, Inc., a Delaware corporation, held by
certain security holders who may offer for sale the notes and the shares of
our common stock into which the notes are convertible at any time at market
prices prevailing at the time of sale or at privately negotiated prices.
The selling security holders may sell the notes or the common stock
directly to purchasers or through underwriters, broker-dealers or agents,
who may receive compensation in the form of discounts, concessions or
commissions.
The holders of the notes may convert the notes into shares of our
common stock at any time at a conversion rate of 20.7512 shares per $1,000
principal amount of notes. On or after December 15, 2002, we may redeem the
notes, in whole or in part, at the redemption prices set forth in the
section entitled "Description of Notes--Redemption at the Option of the
Company."
In the event of a Change of Control, as defined in the section
entitled "Description of Notes--Change in Control Permits Purchase of Notes
at the Option of the Holder," each holder of the notes may require us to
repurchase the notes at 100% of the principal amount of the notes plus
accrued interest.
The notes are general, unsecured obligations that are subordinated in
right of payment to all of our existing and future senior indebtedness and
senior subordinated indebtedness. In addition, the notes will effectively
rank junior to our subsidiaries' liabilities. See "Description of
Notes--Subordination of Notes."
On January 13, 2000 the last reported sale price of our common stock,
listed under the symbol "CTV", on the New York Stock Exchange ("NYSE") was
$40.875 per share.
Our 4% Convertible Subordinated Notes are currently eligible for
trading on the PORTAL Market of the Nasdaq Stock Market.
-----------------
INVESTING IN OUR COMMON STOCK OR OUR CONVERTIBLE SUBORDINATED NOTES
INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING
ON PAGE 5 OF THIS PROSPECTUS.
-----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------------
THE DATE OF THIS PROSPECTUS IS JANUARY _____, 2000
<PAGE>
TABLE OF CONTENTS
PAGE
----
Summary............................................................... 1
Risk Factors.......................................................... 5
Use of Proceeds....................................................... 12
Price Range of Common Stock........................................... 12
Dividend Policy....................................................... 12
Ratio of Earnings to Fixed Charges.................................... 13
Business.............................................................. 14
Description of Notes.................................................. 24
Description of Capital Stock.......................................... 40
Description of Other Indebtedness..................................... 44
Certain United States Federal Tax Consequences........................ 47
Selling Securityholders............................................... 53
Plan of Distribution.................................................. 54
Experts............................................................... 55
Validity of Securities................................................ 55
Where You Can Find More Information................................... 55
Incorporation by Reference............................................ 56
Forward-Looking Statements............................................ 56
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SUMMARY
The following is a summary of more detailed information appearing
elsewhere in this prospectus. This summary is not complete, and does not
contain all the information you should consider. You should read this
entire document carefully, including the "Risk Factors". On July 28, 1997,
General Instrument Corporation spun-off CommScope, Inc., its coaxial and
other cable business, and NextLevel Systems, Inc., its broadband
communication business, as two independent public companies. At the time of
the spin-off, General Instrument Corporation changed its name to General
Semiconductor, Inc. and effected a one for four reverse stock split.
Thereafter, NextLevel Systems, Inc. changed its name to General Instrument
Corporation. Except as otherwise provided in "Description of Notes,"
references in this prospectus to "CommScope, Inc.," or "we," "us," or "our"
are to CommScope, Inc. and its direct and indirect subsidiaries on a
consolidated basis since the spin-off and to the coaxial and other cable
business conducted by General Instrument Corporation prior to the spin-off.
This prospectus includes data regarding the cable industry and other
industries which was obtained from industry publications. These industry
organizations generally indicate that they have obtained information from
sources believed to be reliable, but do not guarantee the accuracy and
completeness of their information. While we believe these industry
publications to be reliable, we have not independently verified their data,
and we do not guarantee the accuracy or completeness of the information,
nor can we provide any assurance that our future performance will follow
industry projections.
COMMSCOPE
We are a leading worldwide designer, manufacturer and marketer of
a broad line of coaxial cables and other high-performance electronic and
fiber-optic cable products for cable television, telephony, Internet access
and wireless communications. We believe that we supplied over 50% of all
coaxial cable purchased in the U.S. in 1998 for broadband cable networks
using Hybrid Fiber Coaxial (HFC) architecture. We believe we are also the
largest manufacturer and supplier of coaxial cable for HFC cable networks
in Europe. We are a leading supplier of coaxial cable for telephone central
office switching and transmission applications, as well as video
distribution applications such as satellite television and security
surveillance. In addition, we have developed an innovative line of coaxial
cables for wireless communication infrastructure applications that have
superior performance characteristics compared to traditional cables. This
line of coaxial cables continues to gain market recognition, as evidenced
by the nearly twofold increase in sales of these products in the third
quarter of 1999 from the second quarter of 1999. We are a leading provider
of high-performance premise wiring for local area networks and have
developed a new patent-pending foaming process for unshielded twisted-pair
cables that significantly reduces cost and improves electrical performance.
We sell our products to approximately 2,400 customers in more than 85
countries.
For the nine months ended September 30, 1999 our revenues were
$537.3 million and our net income was $47.6 million. During this period,
approximately 77% of our revenues were for HFC cable networks and other
video applications, 12% were for wireless, central office and other
telecommunications applications and 11% were for local area network premise
wiring applications. International sales were 24.6% of our revenues during
this period.
We believe that we are the world's most technologically advanced,
low-cost provider of coaxial cable. With our leading product offerings,
cost-efficient manufacturing and economies of scale, we believe we will
benefit from the convergence of video, voice and high-speed Internet access
and the resulting demand for enhanced HFC broadband networks.
We believe that the following industry trends will drive demand
for our products:
o endorsement of the HFC architecture by major cable,
telephone and technology companies;
o increasing use of the Internet;
o increasing need for additional bandwidth to accommodate new
applications;
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o increasing maintenance requirements for HFC cable networks
as operators improve reliability for telephony, data and
other two-way services;
o expansion of telephone central offices to accommodate
digital subscriber line (DSL) growth and growing alternate
access providers of telephony and data services;
o the continuing rapid deployment of wireless communications
systems worldwide; and
o increasing demand for higher speed and bandwidth for local
area networks.
BUSINESS STRATEGY
We have adopted a growth strategy to expand and strengthen our
current market position as the leading worldwide supplier of coaxial cable
for broadband communications. The principal elements of our growth strategy
are:
BENEFIT FROM HFC PARADIGM SHIFT. A vast majority of video
networks worldwide, such as cable service provider networks, have adopted
the HFC cable network architecture for video service delivery. Recent
events involving major telecommunications and cable service providers
create the potential to expand the role of HFC cable networks from a
video-centric focus to a key platform for delivery of a variety of
broadband services. These events include AT&T Corporation's acquisition of
Tele-Communications, Inc. (TCI), AT&T Corporation's pending acquisition of
MediaOne Group, Inc., the strategic relationship between AT&T Corporation
and Time Warner, Inc. to offer cable telephony to residential and small
business customers in 33 states and to develop the next-generation
broadband services, Microsoft Corporation's $1 billion investment in
Comcast Corporation and investments in cable television in Europe and the
United Kingdom, Paul Allen's acquisitions of Marcus Cable Company, L.L.C.,
Charter Communications, Inc. and other cable companies, and the recent
success of high-speed cable data services such as those offered by
Excite@Home Corporation and others. We believe that the HFC cable network
architecture provides the most cost-effective bandwidth for multi-channel
video, voice and data into homes around the world. This architecture
enables both cable and telecommunications service providers to offer new
products and services such as high-speed Internet access, video on demand,
Internet protocol telephony and high-definition television. As the leading
provider of coaxial cable for HFC cable networks, we believe we are well
positioned to benefit from the build out, upgrade and maintenance of these
networks in both domestic and international markets.
DEVELOP PROPRIETARY PRODUCTS AND EXPAND MARKET OPPORTUNITIES. We
maintain an active program to identify new market opportunities and develop
and commercialize products that use our core technology and manufacturing
competencies. We have developed new products and entered new markets,
including coaxial cable for wireless applications, satellite cables, local
area network cables, specialized coaxial based telecommunication cables,
broadcast audio and video cables and coaxial cables in conduit. We have
developed specialized coaxial (Power Feeder [registered trademark]) and
fiber optic (Fiber Feeder [trademark]) cables for distribution and
telephony applications in HFC cable networks.
We used our expertise in aluminum coaxial cable technology to
develop Cell Reach [registered trademark], a patented copper coaxial cable
solution for the wireless antenna market. We believe Cell Reach [registered
trademark] is a technologically superior product with a lower total
lifetime cost of ownership than the current industry standard. Cell Reach
[registered trademark] has been installed in thousands of cellular and
personal communications services antenna sites with leading service
providers such as Nextel Communications, Inc., Sprint Corporation and
certain Sprint affiliates, certain AT&T Corporation affiliates and
Metricom, Inc.
We have used our coaxial cable technology to enter the local area
network cable market and developed UltraMedia, a high-end local area
network cable product targeted for high-speed local area network
applications. We have also recently developed a thin-wall foam design
(Isolite [trademark]) for twisted-pair cables on which a patent is pending.
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CONTINUOUSLY IMPROVE OPERATING EFFICIENCIES. We invested
approximately $113 million in state-of-the-art manufacturing facilities and
new technologies during the past four fiscal years. These investments have
increased our capacity and operating efficiencies, improved management
control and provided more consistent product quality. As a result, we
believe we are one of the few manufacturers capable of satisfying volume
production, time-to-market, and technology requirements of customers for
coaxial cable in the communications industry. We believe that our breadth
and scale permit us to cost-effectively invest in improving our operating
efficiency through investments in engineering and cost-management programs.
We intend to capture value in the supply chain through vertical integration
projects.
EXPAND OUR GLOBAL PLATFORM. We believe that the worldwide demand
for video and data services, the large number of television households
outside the U.S. and relatively low penetration rates for cable television
in most countries provide significant long-term opportunities. We have
become a major supplier of coaxial cable for the cable television and
broadband services industries in international markets, principally Europe,
Latin America and the Pacific Rim. In 1998 we had approximately 350
international customers in more than 85 countries, representing
approximately $139.8 million or 24.4% of our 1998 revenue. We support our
international sales efforts with sales representatives based in Europe,
Latin America and the Pacific Rim. In addition, we are able to benefit from
our domestic cable customer base because some of those customers are also
equity investors in international cable service providers. Although there
is current uncertainty in international markets, we believe that we are
well positioned to benefit over the long term from future international
growth opportunities. We believe we became the largest manufacturer and
supplier of coaxial cable for HFC cable networks in Europe with our
acquisition in January 1999 of Alcatel's coaxial cable business in Seneffe,
Belgium. This acquisition also gave us access to established European
distribution channels and complementary coaxial cable technologies.
In addition, we recently purchased an existing 455,000
square-foot facility in North Carolina to expand our wireless business,
support growth in other markets and house engineering, research and
development functions. We are also in the process of adding 130,000 square
feet at one of our existing facilities. We intend to establish or acquire
international distribution and/or manufacturing facilities to further
improve our ability to service international customers as well as reduce
shipping and importation costs.
LEVERAGE SUPERIOR CUSTOMER SERVICE. We believe that our coaxial
cable manufacturing capacity is greater than that of any other
manufacturer. This enables us to provide our customers with a unique
high-volume service capability. As a result of our 24-hour, seven days per
week continuous manufacturing operations, we are able to offer quick order
turnaround services. In addition, we believe that our ability to offer
rapid delivery services, materials management and logistics services to
customers through our private truck fleet is an important competitive
advantage.
3
<PAGE>
THE OFFERING
Issuer..................... CommScope, Inc.
Offering................... $172,500,000 in principal amount of 4%
convertible subordinated notes due 2006 (and
3,579,581 shares of common stock issuable
upon conversion of the notes) by selling
securityholders.
Maturity.................. December 15, 2006
Interest payment dates.... June 15 and December 15, beginning June 15, 2000.
Conversion rights......... The notes are convertible, at the option of
the holder, at any time on or prior to maturity,
into shares of our common stock at a
conversion price of $48.19 per share, which
is equal to a conversion rate of 20.7512
shares for each $1,000 principal amount of
notes. This conversion price is subject to
adjustment. Subject to certain exceptions,
upon conversion, the holder will not receive
any cash payment representing any further
interest; this accrued interest will be
deemed paid by the shares of common stock
received by the holder on conversion. See
"Description of Notes--Conversion Rights."
Ranking.................... The notes are subordinated, unsecured general
indebtedness. They will be subordinated to
all of our existing and future senior
indebtedness and senior subordinated
indebtedness. The notes will effectively rank
junior to all existing and future liabilities
of our subsidiaries.
At December 31, 1999, the notes were
subordinated to $15.1 million of senior
indebtedness and effectively subordinated to
$10.8 million of other indebtedness of our
subsidiaries.
Optional redemption........ We may redeem some or all of the notes at
any time on or after December 15, 2002, at
the redemption prices described in this
prospectus.
Change of control.......... When a change of control event occurs, each
holder of notes may require us to repurchase
some or all of its notes at a purchase price
equal to 100% of the principal amount of the
notes, plus accrued interest.
Use of proceeds............ We will not receive any proceeds from the
sale of the notes or the shares of common
stock offered in this prospectus. See
"Selling Securityholders."
4
<PAGE>
RISK FACTORS
OUR SALES AND PROFITABILITY MAY BE ADVERSELY AFFECTED BY CHANGES IN CABLE
TELEVISION CAPITAL SPENDING.
Most of our revenues come from sales to the cable television
industry. Demand for our products depends primarily on capital spending by
cable television operators for maintaining, constructing, rebuilding or
upgrading their systems. The amount of this capital spending, and,
therefore, our sales and profitability, will be affected by a variety of
factors, including:
o general economic conditions;
o acquisitions of cable television operators by non-cable
television operators;
o cable system consolidation within the industry;
o the financial condition of domestic cable television
operators and their access to financing;
o competition from satellite and wireless television providers
and telephone companies;
o technological developments; and
o new legislation and regulation of cable television
operators.
We cannot assure you that cable television capital spending will
increase from historical levels or that existing levels of cable television
capital spending will be maintained.
In recent years, cable television capital spending has been
affected by new legislation and regulation, on the federal, state and local
level. Many aspects of government regulation are currently the subject of
judicial proceedings and administrative or legislative proposals. The
Federal Communications Commission is continuing its implementation of the
Telecommunications Act of 1996 (the "Telecom Act") which, when fully
implemented, may significantly impact the communications industry and alter
federal, state and local laws and regulations regarding the provision of
cable and telephony services. The Telecom Act eliminates substantially all
restrictions on the entry of telephone companies and certain public
utilities into the cable television business. Telephone companies may now
enter the cable television business as traditional cable operators, as
common carrier conduits for programming supplied by others, as operators of
wireless distribution systems, or as hybrid common carrier/cable operator
providers of programming on so-called "open video systems." The economic
impact of the Telecom Act, other federal legislation, and the rules
implementing these laws on the cable television industry and our business
is still uncertain.
THE LOSS OF SOME OF OUR PRINCIPAL CABLE TELEVISION CUSTOMERS COULD
MATERIALLY ADVERSELY AFFECT US.
Although the domestic cable television industry is comprised of
thousands of cable systems, a small number of cable television operators
own a majority of cable television systems and account for a majority of
the capital expenditures made by cable television operators. The loss of
some or all of our principal cable television customers could have a
material adverse effect on our business and financial condition.
OUR FAILURE TO INTRODUCE NEW PRODUCTS SUCCESSFULLY, AND CHANGES IN
TECHNOLOGY, COULD ADVERSELY AFFECT US.
Many of our markets are characterized by advances in information
processing and communications capabilities which require increased
transmission speeds and greater capacity, or "bandwidth," for carrying
information. These advances require ongoing improvements in the
capabilities of wire and cable products. We believe that our future success
will depend in part upon our ability to enhance existing products and to
develop and manufacture new products that meet or anticipate these changes.
The failure to introduce successful new or
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enhanced products on a timely and cost-competitive basis could adversely
affect our business and financial condition.
Fiber optic technology presents a potential substitute for the
products that comprise most of our sales. Fiber optic cables have
penetrated the cable television and local area network markets we serve in
high-bandwidth point-to-point and trunking applications. Fiber optic cables
have not yet significantly penetrated the local distribution and
residential application markets we serve because of the high relative cost
of electro-optic interfaces and the high cost of fiber termination and
connection. At the same time, advances in data transmission equipment and
copper cable technologies have increased the relative performance of
copper-based cables which are our principal products. However, a
significant decrease in the cost of fiber optic systems could make these
systems superior on a price/performance basis to copper systems. While we
are a fiber optic cable manufacturer and supplier to a small portion of the
cable television market and certain specialty markets, a significant
decrease in the cost of fiber optic systems would likely have an adverse
effect on us.
OUR INDUSTRY IS HIGHLY COMPETITIVE AND RAPID TECHNOLOGICAL CHANGE MAY LEAD
TO FURTHER COMPETITION.
Our coaxial, fiber optic and electronic cable products compete
with those of a substantial number of foreign and domestic companies, some
of which have greater resources, financial or otherwise, than we have. The
rapid technological changes occurring in the telecommunications industry
could lead to the entry of new competitors. Existing competitors' actions
and new entrants may have an adverse impact on our sales and profitability.
We believe that we enjoy a strong competitive position in the coaxial cable
market because of our position as a low-cost, high-volume coaxial cable
producer and our reputation as a high-quality provider of state-of-the-art
cables, along with our strong orientation toward customer service. However,
we cannot assure you that we will continue to compete successfully with our
existing competitors or that we will be able to compete successfully with
new competitors.
OUR DEPENDENCE ON COMMODITIES SUBJECTS US TO PRICE FLUCTUATIONS WHICH COULD
ADVERSELY AFFECT US.
The principal raw materials we purchase are fabricated aluminum,
plastics, bi-metals, copper and optical fiber. Our profitability may be
affected by changes in the market price of these materials, which are
linked to the commodity markets. Although we have generally been able to
pass on increases in the price of these materials to our customers, we
cannot assure you that we will be able to do so in the future.
Additionally, significant increases in the price of our products due to
increases in the cost of raw materials could have a negative effect on
demand for our products.
DIFFICULTIES WITH OUR KEY SUPPLIERS COULD ADVERSELY AFFECT US.
A significant portion of our raw material purchases are
bi-metallic center conductors for coaxial cables. Almost all of these
supplies are purchased from Copperweld Corporation under a long-term supply
arrangement expiring in March 2000. Copperweld has agreed to continue to
supply us with bi-metallic center conductors after expiration of this
agreement, but this continued supply arrangement is indefinite in duration.
If we are unable to continue to purchase bi-metallic center conductors from
this supplier, either before or after expiration of this arrangement, we
may be unable to obtain these raw materials on commercially acceptable
terms from another source. There are few, and limited, alternative sources
of supply for these raw materials. In February 1999, we purchased the clad
wire fabrication equipment and technology of Texas Instruments Incorporated
for manufacturing copper-clad aluminum wire and copper-clad steel wire. We
anticipate that in 2000 we will begin to produce a significant portion of
the bi-metallic center conductors we use. However, the loss of Copperweld
as a supplier of bi-metallic center conductors, either during the term of
the current supply contract, or after the expiration of that agreement,
and/or our failure to vertically integrate these products, could have a
material adverse effect on our business and financial condition. In
addition, we purchase fine aluminum wire primarily from a single source.
Fine aluminum wire is a smaller raw material purchase than bi-metallic
wire. Neither of these major raw materials could be readily replaced in
sufficient quantities if all supplies from the respective primary sources
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were disrupted for an extended period and we were unable to vertically
integrate the production of these products. In such event, there could be a
materially adverse impact on our financial results.
Additionally, fluorinated-ethylene-propylene (FEP) is the primary
raw material used throughout the industry for producing flame-retarding
cables for local area network applications. There are few worldwide
producers of FEP and market supplies have been periodically limited over
the past several years. Availability of adequate supplies of FEP will be
critical to future local area network cable sales growth.
OUR BUSINESS IS SUBJECT TO THE ECONOMIC UNCERTAINTIES AND POLITICAL RISKS
OF SELLING OUR PRODUCTS IN FOREIGN COUNTRIES.
We believe that growth in international markets, including the
developing markets in Asia, the Middle East and Latin America, and the
expected privatization of the telecommunications structure in many European
countries, represents significant future opportunities for us. However, we
cannot predict with certainty the outlook for international sales in 2000
and beyond due to political and economic uncertainties.
Our international operations are subject to the usual risks
inherent in sales abroad, including risks with respect to currency exchange
rates, economic and political destabilization, restrictive actions by
foreign governments, nationalizations, the laws and policies of the U.S.
affecting trade, foreign investment and loans, and foreign tax laws.
POTENTIAL ENVIRONMENTAL LIABILITIES MAY ARISE IN THE FUTURE AND ADVERSELY
IMPACT OUR FINANCIAL POSITION.
We are subject to various federal, state, local and foreign laws
and regulations governing the use, discharge and disposal of hazardous
materials. We believe that our manufacturing facilities are in substantial
compliance with current laws and regulations. Compliance with current laws
and regulations has not had and is not expected to have a material adverse
effect on our financial condition.
Our present and past facilities have been in operation for many
years, and over that time in the course of those operations, these
facilities have used substances which are or might be considered hazardous,
and we have generated and disposed of wastes which are or might be
considered hazardous. Therefore, it is possible that environmental issues
may arise in the future which we cannot now predict.
OUR INDEBTEDNESS COULD RESTRICT OUR OPERATIONS, MAKE US MORE VULNERABLE TO
ADVERSE ECONOMIC CONDITIONS AND MAKE IT MORE DIFFICULT FOR US TO MAKE
PAYMENTS ON THE NOTES.
As of December 31, 1999, our total long-term debt was
approximately $198.4 million or [ ]% of our combined long-term debt and
total stockholders' equity.
Our current and future indebtedness could have important
consequences to you. For example, it could:
o impair our ability to obtain additional financing in the
future;
o reduce funds available to us for other purposes, including
working capital, capital expenditures, research and
development, strategic acquisitions and other general
corporate purposes;
o restrict our ability to introduce new products or exploit
business opportunities;
o increase our vulnerability to economic downturns and
competitive pressures in the industry we operate in;
o increase our vulnerability to interest rate increases to the
extent variable-rate debt is not effectively hedged;
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o limit, along with the financial and other restrictive
covenants in our indebtedness, our ability to dispose of
assets or borrow additional funds;
o make it more difficult for us to satisfy our obligations
with respect to the notes; and
o place us at a competitive disadvantage.
WE MAY BE ABLE TO INCUR SIGNIFICANTLY MORE DEBT IN THE FUTURE, WHICH WILL
INCREASE THE RISKS RELATED TO OUR INDEBTEDNESS.
We may be able to incur substantial additional indebtedness in
the future. The terms of the indenture do not prohibit us or our
subsidiaries from incurring indebtedness. Our revolving credit facility
permitted additional borrowings of up to $350 million as of December 31,
1999, subject to customary borrowing conditions.
Based on our current level of operations, we believe that our
cash flow from operations and our available financing will be adequate to
meet our anticipated requirements for operating our business and servicing
our debt. Our ability to generate cash flow depends upon, among other
things, our future operating performance. To a large extent, this depends
upon economic, financial, competitive and other factors beyond our control.
If we cannot generate enough cash from operations to make payments on our
indebtedness, we will need to refinance our indebtedness, obtain additional
financing or sell assets. We cannot assure you that we would be able to do
so or do so without additional expense.
HOLDERS OF SENIOR INDEBTEDNESS WILL BE PAID BEFORE HOLDERS OF THE NOTES ARE
PAID.
The notes will be subordinated to our existing and future senior
indebtedness and will be structurally subordinate to all liabilities of our
subsidiaries. As of December 31, 1999, the notes were subordinated to $15.1
million of senior indebtedness and effectively subordinated to $10.8
million of other indebtedness of our subsidiaries. If we become bankrupt,
liquidate, or dissolve, our assets would be available to pay obligations on
the notes only after our senior indebtedness has been paid. We cannot
assure you that there will be sufficient assets to pay amounts due on the
notes. See "Description of Notes--Subordination of Notes."
If we fail to pay any of our senior indebtedness, we may make
payments on the notes only if we cure the default or the holders of the
senior indebtedness waive the default. Moreover, if any non-payment default
exists under our designated senior indebtedness, we may not make any cash
payments on the notes for a period of up to 179 days in any 365 day period,
unless we cure the default, the holders of the senior indebtedness waive
the default or rescind acceleration of the indebtedness, or we repay the
indebtedness in full. See "Description of Notes--Subordination of Notes."
THE RESTRICTIONS IMPOSED BY OUR EXISTING DEBT COULD NEGATIVELY AFFECT OUR
BUSINESS AND OUR FAILURE TO COMPLY WITH THESE RESTRICTIONS COULD RESULT IN
A DEFAULT UNDER OUR DEBT INSTRUMENTS.
Our existing debt agreements contain covenants that restrict our
ability and our subsidiaries' ability to:
o dispose of assets;
o incur additional indebtedness;
o incur liens on property or assets;
o repay other indebtedness;
o pay dividends;
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o enter into certain investments or transactions;
o repurchase or redeem capital stock;
o engage in mergers or consolidations; or
o engage in certain transactions with subsidiaries and
affiliates and otherwise restrict corporate activities.
In addition, our existing debt agreements contain financial
covenants, including:
o a total debt to EBITDA ratio;
o a net worth maintenance; and
o an interest expense coverage ratio.
Our compliance with our covenants in the future may be affected
by events beyond our control. Our breach of or failure to comply with any
of the covenants could result in a default under the debt agreements or the
indenture. If we default under the debt agreements, our senior lenders
could cause all of our outstanding debt obligations to become due and
payable, require us to apply all of our available cash to repay the
indebtedness or prevent us from making debt service payments on any other
indebtedness we owe. If a default under the indenture occurs, the holders
of the notes could elect to declare the notes due and payable. A
significant payment default under our debt agreements or any event of
default under the indenture would be a cross default under the other
instrument and could result in the acceleration of the indebtedness under
both instruments. If the indebtedness under our existing debt agreements or
these notes is accelerated, we may not have sufficient assets to repay
amounts due under our existing debt agreements, these notes or on other
debt securities then outstanding.
WE MAY NOT BE ABLE TO REPURCHASE NOTES UPON A CHANGE OF CONTROL WHICH WOULD
BE AN EVENT OF DEFAULT UNDER THE INDENTURE.
Upon the occurrence of certain specified change of control
events, each holder of notes will have the right at the holder's option to
require us to purchase all or any part of the holder's notes at a cash
price equal to 100% of the principal amount of such holder's notes, plus
accrued interest to the repurchase date. Under our debt agreements, a
change of control is an event of default, and therefore, it restricts us
from repurchasing the notes without the approval of our senior lenders. We
cannot assure you that we will have sufficient funds available or will be
permitted by our senior lenders to repurchase the notes upon a change of
control. Our failure to repurchase the notes would constitute an event of
default under the indenture. See "Description of Notes--Change in Control
Permits Purchase of Notes at Option of the Holder."
WE DEPEND ON THE CASH FLOW OF OUR SUBSIDIARIES TO SATISFY OUR OBLIGATIONS
INCLUDING OUR OBLIGATIONS UNDER THE NOTES.
Our subsidiaries conduct all of our operations and own all of our
consolidated assets. Consequently, our operating cash flow and our ability
to service our debt, including the notes, depends upon the operating cash
flow of our subsidiaries and the payment of funds by them to us in the form
of loans, dividends or otherwise. These payments may not be adequate to pay
interest and principal on the notes when due. In addition, the ability of
our subsidiaries to make payments to us depends on applicable law and
restrictions under our current and future debt agreements and on the terms
of other present and future debt instruments to which our subsidiaries are
or may be a party. These debt agreements and instruments may include
requirements to maintain minimum levels of working capital and other
assets. Our current debt agreements restrict the ability of our
subsidiaries to make loans, pay dividends or make other distributions to us
in the event that there is a payment default under our debt agreements.
9
<PAGE>
YOU MAY BE UNABLE TO SELL YOUR NOTES IF A TRADING MARKET FOR THE NOTES DOES
NOT DEVELOP.
The liquidity of any market for the notes will depend on the
number of holders of the notes, the interest of securities dealers in
making a market in the notes and other factors. Accordingly, we cannot
assure you as to the development or liquidity of any market for the notes.
If an active trading market for the notes does not develop, the market
price and liquidity of the notes may be adversely affected. If the notes
are traded, they may trade at a discount from their initial offering price
depending upon prevailing interest rates, the market for similar
securities, our performance and certain other factors.
THERE MAY BE VOLATILITY OF THE MARKET PRICE OF THE NOTES AND OUR COMMON
STOCK.
The market price of our common stock has fluctuated in the past
and may continue to fluctuate. In addition, the securities markets have
experienced significant price and volume fluctuations. Factors such as
political and economic conditions in foreign countries, quarterly
fluctuations in our operating results and the operating results of our
competitors and changes in our industry may have a significant impact on
the market price of the notes and common stock into which the notes are
convertible. In particular, if we were to report operating results which
did not meet the expectations of research analysts, the market price of the
notes and our common stock could be materially adversely affected.
WE DO NOT ANTICIPATE THAT WE WILL PAY CASH DIVIDENDS.
We have never declared or paid any cash dividends on our capital
stock. We do not currently intend to pay cash dividends in the foreseeable
future but intend to reinvest earnings in our business. Our debt agreements
contain limits on our ability to declare and pay cash dividends on our
common stock.
WE CANNOT PREDICT THE EFFECT FUTURE SALES OF NOTES OR SHARES OF COMMON
STOCK WILL HAVE ON THE MARKET PRICE OF COMMON STOCK.
We cannot predict the effect, if any, that future sales of notes
or shares of common stock will have on the market price of our common stock
prevailing from time to time. Sales of substantial amounts of common stock,
including shares issued upon the conversion of the notes, or the perception
that such sales could occur, may adversely affect prevailing market prices
for common stock.
YEAR 2000 AND SYSTEMS FAILURES MAY ADVERSELY IMPACT OUR OPERATIONS.
Our businesses could be adversely affected by information
technology issues related to the Year 2000 issue. The Year 2000 issue is a
broad business issue, whose impact extends to possible failure of our
financial, distribution and manufacturing systems, as well as to those of
third parties. None of our products contain date sensitive or date
processing logic. The ability of third parties with whom we do business to
address adequately their Year 2000 issues is outside our control. However,
if any of our systems are not Year 2000 compliant or if our customers, our
suppliers or government agencies fail to achieve Year 2000 compliance, and
our contingency plans fail to mitigate any Year 2000 compliance failures,
we may experience adverse consequences, including:
o our customers may be unable to place orders with us due
either to our or their system failures;
o we may be unable to maintain adequate production scheduling,
inventory cost accounting and other elements of our business
that are dependent upon computer systems; and
o we may be unable to deliver our products on a timely basis.
In addition, if our information systems were to fail, the areas
of customer service, warehousing, order fulfillment and other areas could
be adversely affected. The failure of our information systems could result
in lost
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sales, longer turnaround times, significantly increased freight and
warehousing costs, higher levels of inventories and accounts receivable,
extended order lead times and customer service difficulties.
ANTI-TAKEOVER PROVISIONS COULD DELAY OR PREVENT A CHANGE IN CONTROL OR
ADVERSELY IMPACT THE PRICE OF OUR COMMON STOCK.
Provisions in our certificate of incorporation and provisions of
the Delaware General Corporation Law could have the effect of deterring
hostile takeovers or delaying, deterring, or preventing a change of control
of our company, including transactions in which stockholders might
otherwise receive a premium for their shares over current market prices.
See "Description of Capital Stock."
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the notes or
the shares of common stock offered hereby. See "Selling Securityholders."
PRICE RANGE OF COMMON STOCK
Since the spin-off in July 1997, our common stock has been traded
on the New York Stock Exchange under the symbol "CTV." The following table
sets forth the high and low sale prices as reported by the New York Stock
Exchange for the periods indicated. The stock price information shown below
does not include "when-issued" trading prior to the spin-off.
High Low
---- ---
Common Stock Price Range
------------------------
1997
Third Quarter (beginning July 28)...... $19 $12 3/4
Fourth Quarter......................... $14 7/16 $10 3/8
1998
First Quarter.......................... $15 3/16 $11 5/8
Second Quarter......................... $17 7/16 $13 5/16
Third Quarter.......................... $20 11/16 $9 3/8
Fourth Quarter......................... $17 1/4 $8 3/4
1999
First Quarter.......................... $21 9/16 $15 7/8
Second Quarter......................... $31 3/16 $19 1/4
Third Quarter.......................... $40 $29 1/4
Fourth Quarter......................... $46 3/8 $31 11/16
2000
First Quarter (through January 13) $42 $35 1/8
As of December 31, 1999, the approximate number of registered
stockholders of record of our common stock was 755.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital
stock. We do not currently intend to pay cash dividends in the foreseeable
future, but intend to reinvest earnings in our business. Our debt
agreements contain limits on our ability to declare and pay cash dividends
on our common stock.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the actual and pro forma ratio of
earnings to fixed charges for each of the years ended December 31, 1994,
1995, 1996, 1997 and 1998 and for the nine months ended September 30, 1998
and 1999.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
--------------------------------------------- ---------------------
1994 1995 1996 1997 1998 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C>
Actual ratio of earnings to
fixed charges (1).............. 7.15 9.63 10.13 5.49 4.90 4.39 10.70
Pro forma ratio of earnings to
fixed charges (2).............. - - - - 5.94 - 11.62
</TABLE>
(1) For purposes of computing the actual ratio of earnings to fixed
charges, earnings are divided by fixed charges. Earnings represent the
aggregate of income beflre income taxes plus fixed charges. Fixed
charges represent interest plus amortization of deferred financing
fees.
(2) For purposes of computing the pro forma ratio of earnings to fixed
charges, earnings and fixed charges (as defined in (1) above) have
been adjusted for the assumed issuance of the convertible notes and
use of proceeds to extinguish outstanding debt on the revolving credit
agreement as of the beginning of each period. For both periods shown,
earnings were increased and fixed charges were decreased based on the
pro forma net decrease in interest expense and amortization of
deferred financing fees.
Nine Months
Year Ended Ended
December 31, September 30,
1998 1999
---------- ----------
Pro forma decrease in interest expense $3,427,265 $1,161,102
Pro forma increase in deferred financing
fees 720,357 540,268
---------- ----------
Pro forma net increase in earnings
and decrease in fixed charges $2,706,908 $ 620,834
========== ==========
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BUSINESS
GENERAL
We are a leading worldwide designer, manufacturer and marketer of
a broad line of coaxial cables and other high-performance electronic and
fiber-optic cable products for cable television, telephony, Internet access
and wireless communications. We believe that we supplied over 50% of all
coaxial cable purchased in the U.S. in 1998 for broadband cable networks
using Hybrid Fiber Coaxial (HFC) architecture. We believe we are also the
largest manufacturer and supplier of coaxial cable for HFC cable networks
in Europe. We are a leading supplier of coaxial cable for telephone central
office switching and transmission applications, as well as video
distribution applications such as satellite television and security
surveillance. In addition, we have developed an innovative line of coaxial
cables for wireless communication infrastructure applications that have
superior performance characteristics compared to traditional cables. This
line of coaxial cables continues to gain market recognition, as evidenced
by the nearly twofold increase in sales of these products in the third
quarter of 1999 from the second quarter of 1999. We are a leading provider
of high-performance premise wiring for local area networks and have
developed a new patent-pending foaming process for unshielded twisted-pair
cables that significantly reduces cost and improves electrical performance.
We sell our products to approximately 2,400 customers in more than 85
countries.
For the nine months ended September 30, 1999 our revenues were
$537.3 million and our net income was $47.6 million. During this period,
approximately 77% of our revenues were for HFC cable networks and other
video applications, 12% were for wireless, central office and other
telecommunications applications and 11% were for local area network premise
wiring applications. International sales were 24.6% of our revenues during
this period.
We believe that we are the world's most technologically advanced,
low-cost provider of coaxial cable. With our leading product offerings,
cost-efficient manufacturing and economies of scale, we believe we will
benefit from the convergence of video, voice and high-speed Internet access
and the resulting demand for enhanced HFC broadband networks.
We believe that the following industry trends will drive demand
for our products:
o endorsement of the HFC architecture by major cable,
telephone and technology companies;
o increasing use of the Internet;
o increasing need for additional bandwidth to accommodate new
applications;
o increasing maintenance requirements for HFC cable networks
as operators improve reliability for telephony, data and
other two-way services;
o expansion of telephone central offices to accommodate
digital subscriber line (DSL) growth and growing alternate
access providers of telephony and data services;
o the continuing rapid deployment of wireless communications
systems worldwide; and
o increasing demand for higher speed and bandwidth for local
area networks.
BUSINESS STRATEGY
We have adopted a growth strategy to expand and strengthen our
current market position as the leading worldwide supplier of coaxial cable
for broadband communications. The principal elements of our growth strategy
are:
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BENEFIT FROM HFC PARADIGM SHIFT. A vast majority of video
networks worldwide, such as cable service provider networks, have adopted
the HFC cable network architecture for video service delivery. Recent
events involving major telecommunications and cable service providers
create the potential to expand the role of HFC cable networks from a
video-centric focus to a key platform for delivery of a variety of
broadband services. These events include AT&T Corporation's acquisition of
Tele-Communications, Inc. (TCI), AT&T Corporation's pending
acquisition of MediaOne Group, Inc., the strategic relationship between
AT&T Corporation and Time Warner, Inc. to offer cable telephony to
residential and small business customers in 33 states and to develop the
next-generation broadband services, Microsoft Corporation's $1 billion
investment in Comcast Corporation and investments in cable television in
Europe and the United Kingdom, Paul Allen's acquisitions of Marcus Cable
Company, L.L.C., Charter Communications, Inc. and other cable companies,
and the recent success of high-speed cable data services such as those
offered by Excite@Home Corporation and others. We believe that the HFC
cable network architecture provides the most cost-effective bandwidth for
multi-channel video, voice and data into homes around the world. This
architecture enables both cable and telecommunications service providers to
offer new products and services such as high-speed Internet access, video
on demand, Internet protocol telephony and high-definition television. As
the leading provider of coaxial cable for HFC cable networks, we believe we
are well positioned to benefit from the build out, upgrade and maintenance
of these networks in both domestic and international markets.
DEVELOP PROPRIETARY PRODUCTS AND EXPAND MARKET OPPORTUNITIES. We
maintain an active program to identify new market opportunities and develop
and commercialize products that use our core technology and manufacturing
competencies. We have developed new products and entered new markets,
including coaxial cable for wireless applications, satellite cables, local
area network cables, specialized coaxial based telecommunication cables,
broadcast audio and video cables and coaxial cables in conduit. We have
developed specialized coaxial (Power Feeder [registered trademark]) and
fiber optic (Fiber Feeder [trademark]) cables for distribution and
telephony applications in HFC cable networks.
We used our expertise in aluminum coaxial cable technology to
develop Cell Reach [registered trademark], a patented copper coaxial cable
solution for the wireless antenna market. We believe Cell Reach [registered
trademark] is a technologically superior product with a lower total
lifetime cost of ownership than the current industry standard. Cell Reach
[registered trademark] has been installed in thousands of cellular and
personal communications services antenna sites with leading service
providers such as Nextel Communications, Inc., Sprint Corporation and
certain Sprint affiliates, certain AT&T Corporation affiliates and
Metricom, Inc.
We have used our coaxial cable technology to enter the local area
network cable market and developed UltraMedia, a high-end local area
network cable product targeted for high-speed local area network
applications. We have also recently developed a thin-wall foam design
(Isolite [trademark]) for twisted-pair cables on which a patent is pending.
CONTINUOUSLY IMPROVE OPERATING EFFICIENCIES. We invested
approximately $113 million in state-of-the-art manufacturing facilities and
new technologies during the past four fiscal years. These investments have
increased our capacity and operating efficiencies, improved management
control and provided more consistent product quality. As a result, we
believe we are one of the few manufacturers capable of satisfying volume
production, time-to-market, and technology requirements of customers for
coaxial cable in the communications industry. We believe that our breadth
and scale permit us to cost-effectively invest in improving our operating
efficiency through investments in engineering and cost-management programs.
We intend to capture value in the supply chain through vertical integration
projects.
EXPAND OUR GLOBAL PLATFORM. We believe that the worldwide demand
for video and data services, the large number of television households
outside the U.S. and relatively low penetration rates for cable television
in most countries provide significant long-term opportunities. We have
become a major supplier of coaxial cable for the cable television and
broadband services industries in international markets, principally Europe,
Latin America and the Pacific Rim. In 1998 we had approximately 350
international customers in more than 85 countries, representing
approximately $139.8 million or 24.4% of our 1998 revenue. We support our
international sales
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efforts with sales representatives based in Europe, Latin America and the
Pacific Rim. In addition, we are able to benefit from our domestic cable
customer base because some of those customers are also equity investors in
international cable service providers. Although there is current
uncertainty in international markets, we believe that we are well
positioned to benefit over the long term from future international growth
opportunities. We believe we became the largest manufacturer and supplier
of coaxial cable for HFC cable networks in Europe with our acquisition in
January 1999 of Alcatel's coaxial cable business in Seneffe, Belgium. This
acquisition also gave us access to established European distribution
channels and complementary coaxial cable technologies.
In addition, we recently purchased an existing 455,000
square-foot facility in North Carolina to expand our wireless business,
support growth in other markets and house engineering, research and
development functions. We are also in the process of adding 130,000 square
feet at one of our existing facilities. We intend to establish or acquire
international distribution and/or manufacturing facilities to further
improve our ability to service international customers as well as reduce
shipping and importation costs.
LEVERAGE SUPERIOR CUSTOMER SERVICE. We believe that our coaxial
cable manufacturing capacity is greater than that of any other
manufacturer. This enables us to provide our customers with a unique
high-volume service capability. As a result of our 24-hour, seven days per
week continuous manufacturing operations, we are able to offer quick order
turnaround services. In addition, we believe that our ability to offer
rapid delivery services, materials management and logistics services to
customers through our private truck fleet is an important competitive
advantage.
BUSINESS UNITS
We manufacture and sell cable for three broad product categories:
o cable television and other video applications;
o local area network applications; and
o wireless and other telecommunications applications.
DOMESTIC HFC CABLE TV MARKET. We design, manufacture and market
primarily coaxial cable, most of which is used in the cable television
industry. We manufacture two primary types of coaxial cable:
o semi-flexible, which has an aluminum or copper outer tubular
shield or outer conductor; and
o flexible, which is typically smaller in diameter than
semi-flexible coaxial cable and has a more flexible outer
conductor typically made of metallic tapes and braided fine
wires.
Semi-flexible coaxial cables are used in the trunk and feeder
distribution portion of cable television systems, and flexible coaxial
cables, also known as drop cables, are used for connecting the feeder cable
to a residence or business or for some other communications applications.
We also manufacture fiber optic cable primarily for the cable television
industry.
Cable television service traditionally has been provided
primarily by cable television system operators that have been awarded
franchises from the municipalities they serve. In response to increasing
competitive pressures, cable television systems operators have been
expanding the variety of their service offerings not only for video, but
for Internet access and telephony, which generally requires increasing
amounts of cable and system bandwidth. Cable television systems operators
have generally adopted, and we believe that for the foreseeable future will
continue to adopt, HFC cable system designs when seeking to increase system
bandwidth. These systems combine the advantages of fiber optic cable in
transmitting clear signals over a long distance without amplification, and
the
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advantages of high-bandwidth coaxial cable in ease of installation, low
cost and compatibility with the receiving components of the customer's
communications devices. We believe that:
o cable television systems operators are likely to increase
their use of fiber optic cable for the trunk and feeder
portions of their cable systems;
o there will be an ongoing need for high-capacity coaxial
cable for the local distribution and street-to-the-home
portions of the cable system; and
o coaxial cable will remain the most cost effective means for
the transmission of broadband signals to the home or
business over shorter distances in cable networks.
For local distribution purposes, coaxial cable has the necessary
signal carrying capacity or bandwidth to handle upstream and downstream
signal transmission.
The construction, expansion and upgrade of cable systems require
significant capital investment by cable operators. Cable television systems
operators have been significant borrowers from the credit and capital
markets. Therefore, capital spending within the domestic cable television
industry has historically been cyclical, depending to a significant degree
on the availability of credit and capital. The cable television industry
has also been subject to varying degrees of both national and local
government regulation, most recently the Telecom Act and the 1992 Cable
Act, and their implementing regulations adopted in 1993 and 1994. The
regional Bell operating companies and other telephone service providers
have generally been subject to regulatory restrictions which prevented them
from offering cable television service within their franchise telephone
areas. However, the Telecom Act removes or phases out many of the
regulatory and sale restrictions affecting cable television systems
operators and telephone operating companies in the offering of video and
telephone services. We believe that the Telecom Act will encourage
competition among cable television systems operators, telephone operating
companies and other communications companies in offering video, telephone
and data services such as Internet access to consumers, and that providers
of such services will upgrade their present communications delivery
systems. We have provided coaxial cables to most major U.S. telephone
operating companies. Several of these companies are installing broadband
networks for the delivery of video, telephone and other services to some
portion of their telephone service areas. The broadband networks proposed
by some of the telephone companies use HFC technologies similar to those
employed by many cable television operators.
INTERNATIONAL MARKETS. Cable system designs using HFC technology
are increasingly being used in international markets with low cable
television penetration. Based upon industry trade publications and reports
from telecommunications industry analysts, we estimate that approximately
32% of the television households in Europe subscribe to some form of
multichannel television service as compared to a subscription rate of
approximately 75% in the U.S. Based upon such sources, we estimate that
subscription rates in the Asia/Pacific Rim and Latin American/Caribbean
markets are even lower at approximately 28% and 19%, respectively. In terms
of television households, it is estimated that there are approximately 263
million television households in Europe, approximately 440 million in
Asia/Pacific Rim and approximately 96 million in Latin America and the
Caribbean. This compares to approximately 100 million television households
in the U.S.
As of September 30, 1999, we had sales in more than 85 countries.
We have penetrated the international marketplace through a network of
distributors and agents located in major countries where we do business. In
addition to new customers developed by our network of distributors and
sales representatives, many large U.S. cable television operators, with
whom we have had long established business relationships, are active
investors in cable television systems outside the U.S.
VIDEO AND BROADCAST APPLICATIONS (NON-CABLE TELEVISION). Many
specialized markets or applications are served by multiple cable media such
as coaxial, twisted pair, fiber optic or combinations of each. We are a
leading producer of composite cables made of flexible coaxial and twisted
copper pairs for full service communications providers worldwide. In the
satellite direct-to-home cable market, where specialized composite coaxial
and copper
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cables transmit satellite-delivered video signals and antenna
positioning/control signals, we have developed a leading market position.
We market an array of premium metallic and optical cable products directed
at the broadcasting and video production studio market. Because of our
position in other video transport markets and access to distribution
channels within the market, we view these products as a growth opportunity,
although we cannot assure you that we will be able to penetrate this market
successfully.
LOCAL AREA NETWORK MARKET. The proliferation of personal
computers, and more broadly the practice of distributed computing, has
created a need for products which enable users to share files, applications
and peripheral equipment such as printers and data storage devices. Local
area networks, typically consisting of at least one dedicated computer (a
"server"), peripheral devices, network software and interconnecting cables,
were developed in response to this demand. We manufacture a variety of
twisted pair, coaxial and fiber optic cables to transmit data for local
area network applications. The most widely used cable design for this
application consists of four high-performance twisted pairs that are
capable of transmitting data at rates in excess of 100 mbps. We focus our
products and marketing on cables with enhanced electrical and physical
performance such as our UltraMedia unshielded twisted pair. We believe that
UltraMedia cable is among the highest performing unshielded twisted pair
cables in the industry. Copper and fiber optic composite cables are
frequently combined in a single cable to reduce installation costs and
support multimedia applications.
WIRELESS COMMUNICATION APPLICATIONS. We believe that the rapid
deployment of cellular or "wireless" communication systems throughout the
U.S. and the rest of the world presents a growth opportunity for us.
Semi-flexible coaxial cables are used to connect the antennae located at
the top of cellular antenna towers to the radios and power sources located
adjacent to or near the antenna site. In 1996 and 1997, we developed Cell
Reach [registered trademark] products, a line of copper shielded
semi-flexible coaxial cables and related connectors and accessories to
address this market. We are expanding manufacturing capacity for this
product line and we are developing additional products and marketing
programs for Cell Reach [registered trademark] for both the U.S. and
certain international markets. Cell Reach [registered trademark] has been
installed in thousands of cellular and personal communications services
sites with leading service providers such as Nextel Communications, Inc.,
Sprint Corporation and certain Sprint affiliates, certain AT&T Corporation
affiliates and Metricom, Inc. There are, however, larger, well established
companies with significant financial resources and brand recognition in the
cellular market which have established marketing channels for coaxial
cables and accessories.
OTHER MARKETS. We have developed a strategy for addressing
additional cable consuming markets. By combining narrowly focused product
and market management with our cable manufacturing and operational skills,
we are entering new markets for broadcast, home automation, telephone
central office switching and transmission, and other high-performance
communications applications.
MANUFACTURING
We employ advanced cable manufacturing processes, the most
important of which are:
o thermoplastic extrusion for insulating wires and cables;
o high-speed welding and swaging of metallic shields or outer
conductors;
o braiding;
o cabling; and
o automated testing.
Many of these processes, some of which are proprietary and/or
trade secret information, are performed on equipment that has been modified
for our purposes or specifically built to our specifications, often
internally in our own machine shop facilities. We fabricate very few of the
raw material components used in making most of our
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cables, such as wires, tapes, tubes and similar materials. We believe,
however, that fabrication, to the extent economically feasible, could be
done by us instead of being outsourced.
For example, we acquired the clad wire fabrication equipment and
technology of Texas Instruments Incorporated for manufacturing copper-clad
aluminum wire and copper-clad steel wire that we use as center conductors
for our cable. This acquisition allows us to further vertically integrate
our processes, providing an opportunity to significantly reduce cost. We
are also pursuing fine wire drawing to produce wires to be braided for
flexible coaxial cables. The manufacturing processes of the three principal
types of cable we manufacture are further described below.
COAXIAL CABLES. We employ a number of advanced plastic and metal
forming processes in the manufacture of coaxial cable. Three fundamental
process sequences are common to almost all coaxial cables:
o First, a plastic insulation material, called the dielectric,
is melt extruded around a metallic wire or center conductor.
Current state-of-the-art dielectrics consist of foamed
plastics to enhance the electrical properties of the cable.
Precise control of the foaming process is critical to
achieve the mechanical and electrical performance required
for broadband services and cellular communications
applications. We believe that plastic foam extrusion, using
proprietary materials, equipment and control systems, is one
of our core competencies.
o The second step involves sheathing the dielectric material
with a metallic shield or outer conductor. Three basic
shield designs and processes are used. For semi-flexible
coaxial cables, we apply solid aluminum or copper shields
over the dielectric by either pulling the dielectric
insulated wire into a long, hollow metallic tube or welding
the metallic tube directly over the dielectric. Welding
allows the use of thinner metal, resulting in more flexible
products. We use a proprietary welding process that achieves
significantly higher process speeds than those achievable
using other cable welding methods. The same welding process
has led to extremely efficient manufacturing processes of
copper shielded products for cellular communications. For
both hollow and welded tubes, the cable is passed through
tools that form the metallic shield tightly around the
dielectric.
o Flexible coaxial cables, which are usually smaller in
diameter than semi-flexible coaxial cables, generally are
made with the third shield design. Flexible outer shield
designs typically involve laminated metallic foils and
braided fine wires which are used to enhance flexibility
which is more desirable for indoor wiring or for connecting
subscribers in drop cable applications.
o The third and usually final process sequence is the melt
extrusion of thermoplastic jackets to protect the coaxial
cable. A large number of variations are produced during this
sequence including: incorporating an integral strength
member; customer specified extruded stripes and printing for
identification; abrasion and crush resistant jackets; and
adding moisture blocking fillers.
TWISTED COPPER PAIRS. We insulate single copper wires using
high-speed thermoplastic extrusion techniques. Two insulated copper singles
are then twinned by twisting them into an electrically balanced pair unit
in a separate process. They are then bunched or cabled by grouping two or
more pair units into larger units for further processing in one or more
further processes depending on the number of pairs desired within the
completed cable. The cabled units are then shielded and jacketed or simply
jacketed without applying a metallic shield in the jacketing process. The
jacketing process involves extrusion of a plastic jacket over a shielded or
unshielded cable core. The majority of sales of our twisted copper pairs
come from plenum rated unshielded twisted pair cables for local area
network applications. Plenum cables are cables rated under the National
Electrical Code as safe for installation within the air plenum areas of
office buildings due to their flame retarding and low smoke generating
characteristics when heated. Plenum cables are made from more costly
thermoplastic insulating materials, such as FEP. These materials have
significantly higher extrusion temperature profiles that require more
costly extrusion equipment than non-plenum rated cables. We believe that
the processing of plenum rated materials is one of our core competencies.
In addition, we recently announced an engineering breakthrough for the
extrusion of FEP. The
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patent pending thin-wall foam FEP process improves signal velocity and uses
significantly less raw material in a smaller diameter cable in typical
applications. We believe that this process enhances our ability to grow and
serve customers in all local area network segments.
FIBER OPTIC CABLES. We manufacture fiber optic cables by
purchasing bulk uncabled optical fiber singles and colors and buffering
them before cabling them into unjacketed core units. We then apply
protective outer jackets and, sometimes, shields and jackets in a final
process before testing. The manufacturing and test equipment for fiber
optic cables are different from those used to manufacture coaxial and
copper twisted pair cables. Most of the fiber optic cables we produce are
sold to the cable television and local area network industry. Some of these
fiber optic cables are produced under licenses acquired from other fiber
and fiber optic cable manufacturers.
COMPOSITE CABLES. We also produce cables that are combinations of
some or all of coaxial cables, copper singles or twisted copper pairs and
fiber optic cables within a single cable for a variety of applications. The
most significant of the composite cables we manufacture are combination
coaxial and copper twisted pairs within a common outer jacket which are
being used by some telephone companies and cable operators to provide both
cable television services and telephone services to the same households
over HFC cable networks. Nearly all of our current markets have
applications for composite cables which we can manufacture.
RESEARCH AND DEVELOPMENT
Our research, development and engineering expenditures for the
creation and application of new and improved products and processes were $6
million, $6 million and $5 million for the years ended December 31, 1998,
1997 and 1996, respectively, and $6 million for the nine months ended
September 30, 1999. We focus our research and development efforts primarily
on those product areas that we believe have the potential for broad market
applications and significant sales within a one-to-three year period. We
anticipate that the level of spending on product development activities
will accelerate in future years. The widespread deployment of broadband
services and HFC cable systems is expected to provide opportunities for us
to enhance our coaxial cable product lines and to improve our manufacturing
processes. Additionally, we expect that our participation in the local area
network, wireless communications and other new markets now identified will
require higher rates of product development spending in relation to sales
generated than has been the case in recent years.
SALES AND DISTRIBUTION
We market our products worldwide through a combination of more
than 100 direct sales, territory managers and manufacturers' representative
personnel. We support our sales organization with regional service centers
in: North Carolina; California; Alabama; Seneffe, Belgium; Birmingham,
England; and Melbourne, Australia. In addition, we utilize local
inventories, sales literature, internal sales service support, design
engineering services and a group of product engineers who travel with sales
personnel and territory managers and assist in product application issues,
and conduct technical seminars at customer locations to support our sales
organization. We have expanded our global presence through our acquisition
of Europe's largest manufacturer of cable television coaxial cable.
A key aspect of our customer support and distribution chain is
the use of our private truck fleet. We believe that the ability to offer
rapid delivery services, materials management and logistics services to
customers through our private truck fleet is an important competitive
advantage.
Our products are sold and used in a wide variety of applications.
Our products primarily are sold directly to cable system operators,
telecommunications companies, original equipment manufacturers and
indirectly through distributors. There has been a trend on the part of
original equipment manufacturer customers to consolidate their lists of
qualified suppliers to companies that have a global presence, can meet
quality and delivery standards, have a broad product portfolio and design
capability, and have competitive prices. We have concentrated our efforts
on service and productivity improvements including advanced computer aided
design and manufacturing systems, statistical process controls and
just-in-time inventory programs to increase product quality and shorten
product delivery schedules. Our strategy is to provide a broad selection of
products in the areas in
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which we compete. We have achieved a preferred supplier designation from
many of our cable television, telephone and original equipment manufacturer
customers.
Cable television services in the U.S. are provided primarily by
cable television systems operators. It is estimated that the five largest
cable television systems operators account for more than 50% of the cable
television subscribers in the U.S. The major cable television systems
operators include such companies as AT&T, Time Warner Cable, MediaOne,
Comcast and Cablevision Systems Corporation. Many of the major cable
television systems operators are our customers, including those listed
above. During the nine months ended September 30, 1999, AT&T accounted for
approximately 11% of our net sales. During 1998 and 1997, sales to no
single customer accounted for 10% or more of our net sales and TCI (now
part of AT&T) was the only customer which accounted for 10% or more of our
net sales during 1996.
PATENTS
We pursue an active policy of seeking intellectual property
protection, namely patents, for new products and designs. We hold 45
patents worldwide and have 80 pending applications. We consider our patents
to be valuable assets, but no single patent is material to our operations
as a whole. We intend to rely on our proprietary knowledge, trade secrets
and continuing technological innovation to develop and maintain our
competitive position.
BACKLOG
At December 31, 1998, 1997 and 1996, we had an order backlog of
approximately $43 million, $55 million and $36 million, respectively.
Orders typically fluctuate from quarter to quarter based on customer demand
and general business conditions. Backlog includes only orders for products
scheduled to be shipped within six months. Unfilled orders may be canceled
prior to shipment of goods; however, cancellations historically have not
been material. However, significant elements of our business, such as sales
to the cable television industry, distributors, the computer industry and
other commercial customers, generally have short lead times. Therefore, our
current order backlog may not be indicative of future demand.
COMPETITION
We encounter competition in substantially all areas of our
business. We compete primarily on the basis of product specifications,
quality, price, engineering, customer service and delivery time.
Competitors include large, diversified companies, some of which have
substantially greater assets and financial resources than we do, as well as
medium to small companies. We also face competition from certain smaller
companies that have concentrated their efforts in one or more areas of the
coaxial cable market. We believe that we enjoy a strong competitive
position in the coaxial cable market due to our position as a low-cost,
high-volume coaxial cable producer and reputation as a high-quality
provider of state-of-the-art cables with a strong orientation toward
customer service. We also believe that we enjoy a strong competitive
position in the electronic cable market due to our large direct field sales
organization within the local area network segment, the comprehensive
nature of our product line and our long established reputation for quality.
RAW MATERIALS
In the manufacture of coaxial and twisted-pair cables, we process
metal tubes, tapes and wires including bi-metallic wires (wires made of
aluminum or steel with thin outer skins of copper) that are fabricated from
high-grade aluminum, copper and steel. Most of these fabricated metal
components are purchased under supply arrangements with some portion of the
unit pricing indexed to commodity market prices for these metals. We have
adopted a hedging policy pursuant to which we may, from time to time,
attempt to match futures contracts or option contracts for a specific metal
with some portion of the anticipated metal purchases for the same periods.
Other major raw materials we use include polyethelenes, polyvinylchlorides,
FEP and other plastic insulating materials, optical fibers, and wood and
cardboard shipping and packaging materials. In 1998, approximately 13% of
our raw material purchases were for bi-metallic center conductors for
coaxial cables, nearly all of which were
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purchased from Copperweld Corporation under a long-term supply arrangement
expiring in March 2000. Copperweld has agreed to continue to supply us with
bi-metallic center conducts after expiration of this agreement, but this
continued supply arrangement is indefinite in duration. If we are unable to
continue to purchase bi-metallic center conductors from this supplier,
either before or after expiration of this arrangement, we may be unable to
obtain these raw materials on commercially acceptable terms from another
source. There are few, and limited, alternative sources of supply for these
raw materials. In February 1999, we purchased the clad wire fabrication
equipment and technology of Texas Instruments Incorporated for
manufacturing copper-clad aluminum wire and copper-clad steel wire. We
anticipate that in 2000 we will begin to produce a significant portion of
the bi-metallic center conductors we use. However, the loss of Copperweld
as a supplier of bi-metal center conductors, either during the term of the
current supply contract, or after the expiration of that agreement, and/or
our failure to vertically integrate these products, could have a material
adverse effect on our business and financial condition. In addition, we
purchase fine aluminum wire primarily from a single source. Fine Aluminum
wire is a smaller raw material purchase than bi-metallic wire. Neither of
these major raw materials could be readily replaced in sufficient
quantities if all supplies from the respective primary sources were
disrupted for an extended period and we were unable to vertically integrate
the production of these products. In such event, there could be a
materially adverse impact on our financial results.
Additionally, FEP is the primary raw material used throughout the
industry for producing flame-retarding cables for local area network
applications. There are few worldwide producers of FEP and market supplies
have been periodically limited over the past several years. Availability of
adequate supplies of FEP will be critical to future local area network
cable sales growth.
We have demonstrated an ability to successfully foam FEP. Our
ability to expand foaming of FEP on a larger scale would help moderate the
impact of any limitation of the FEP supply. Alternative sources of supply
or access to alternative materials are generally available for all other
major raw materials we use. Supplies of all other material raw materials we
use are generally adequate and expected to remain so for the foreseeable
future.
ENVIRONMENT
We use some hazardous substances and generate some solid and
hazardous waste in the ordinary course of our business. As a result, we are
subject to various federal, state, local and foreign laws and regulations
governing the use, discharge and disposal of hazardous materials. Because
of the nature of our business, we have incurred, and will continue to
incur, costs relating to compliance with these environmental laws. Although
we believe that we are in substantial compliance with such environmental
requirements, and we have not in the past been required to incur material
costs in connection with this compliance, there can be no assurance that
our cost to comply with these requirements will not increase in the future.
Although we are unable to predict what legislation or regulations may be
adopted in the future with respect to environmental protection and waste
disposal, compliance with existing legislation and regulations has not had
and is not expected to have a material adverse effect on our operations or
financial condition.
EMPLOYEES
At November 30, 1999, we employed approximately 3,200 people.
Substantially all employees are located in the U.S. We also have employees
in foreign countries, including those in our Seneffe, Belgium operations.
We believe that our relations with our employees are satisfactory.
PROPERTIES
Our principal administrative, production and research and
development facilities are located in the following locations:
The Hickory, North Carolina facility occupies approximately
40,000 square feet under a lease expiring in December 2001. Our executive
offices, sales office and customer service department are located at this
facility.
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The Catawba, North Carolina facility occupies approximately
1,000,000 square feet and is owned by us. The Catawba facility manufactures
coaxial cables, is the major distribution facility for our products and
houses certain administrative and engineering activities.
The Claremont, North Carolina facility occupies approximately
450,000 square feet and is owned by us. We are in the process of adding
130,000 square feet of capacity at this facility. The Claremont facility
manufactures coaxial, copper twisted pair and fiber optic cables and houses
certain of our administrative, sales and engineering activities.
The Scottsboro, Alabama facility occupies 150,000 square feet and
is owned by us. The Scottsboro facility manufactures coaxial cables.
The Statesville, North Carolina facility occupies approximately
315,000 square feet and is owned by us. The Statesville facility houses
certain local area network cable manufacturing, cable-in-conduit
manufacturing, wire fabrication, recycling activities, research and
development, and engineering activities.
During 1999, we purchased an approximately 120,000 square-foot
facility in Seneffe, Belgium, which houses certain coaxial cable
manufacturing and sales activities.
We recently purchased a facility in Newton, North Carolina with
455,000 square feet of manufacturing, office and warehouse space. We intend
to renovate the facility and establish the new CommScope Cable Technology
Center at the location. Once renovated, we expect the facility to house the
majority of our engineering, research and development functions as well as
manufacturing of wireless products.
We do not believe there is any material long-term excess capacity
in our facilities, although utilization is subject to change based on
customer demand. We believe that our facilities and equipment generally are
well maintained, in good operating condition and suitable for our purposes
and adequate for our present operations.
LEGAL PROCEEDINGS
We are not involved in any pending legal proceedings other than
various claims and lawsuits arising in the normal course of business. We do
not believe that any such claims or lawsuits will have a material adverse
effect on our financial statements.
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DESCRIPTION OF NOTES
The Notes were issued under an indenture dated as of December 15,
1999 (the "Indenture"), between us and First Union National Bank, as
trustee (the "Trustee"). A copy of the Indenture and Registration Rights
Agreement are filed as exhibits to the Registration Statement of which this
prospectus is a part. The following summaries of certain provisions of the
Notes, the Indenture and the Registration Rights Agreement do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, all of the provisions of the Notes, the Indenture and the
Registration Rights Agreement including the definitions therein of certain
terms which are not otherwise defined in this prospectus. Wherever
particular provisions or defined terms of the Indenture (or of the form of
Note which is a part thereof) or the Registration Rights Agreement are
referred to, such provisions or defined terms are incorporated herein by
reference. Unless the context suggests otherwise, references in this
"Description of Notes" to the "Company" refer to CommScope and not to its
subsidiaries.
GENERAL
The Notes are unsecured, subordinated obligations of the Company
limited to $172,500,000 aggregate principal amount and mature on December
15, 2006. The principal amount of each Note is $1,000 and is payable at the
office of the Paying Agent, which initially is the Trustee, or an office or
agency maintained by the Company for such purpose in the Borough of
Manhattan, City of New York. The Notes are subordinated in right of payment
to all existing and future Senior Indebtedness as described under
"--Subordination of Notes" below.
The Notes bear interest at the rate of 4% per annum on the
principal amount from December 15, 1999, or from the most recent date to
which interest has been paid or provided for until the Notes are paid in
full or funds are made available for payment in full of the Notes in
accordance with the Indenture. Interest is payable at maturity (or earlier
purchase, redemption or, in certain circumstances, conversion) and
semiannually on June 15 and December 15 of each year (each an "Interest
Payment Date"), commencing on June 15, 2000, to holders of record at the
close of business on June 1 or December 1 (whether or not a business day)
immediately preceding each Interest Payment Date (each a "Regular Record
Date"). Each payment of interest on the Notes will include interest accrued
through the day before the applicable Interest Payment Date or the date of
maturity (or earlier purchase, redemption or, in certain circumstances,
conversion), as the case may be. Any payment of principal and interest
required to be made on any day that is not a business day will be made on
the next succeeding business day.
In the event of the maturity, conversion, purchase by us at the
option of a holder or redemption of a Note, interest will cease to accrue
on such Note, under the terms and subject to the conditions of the
Indenture. We may not reissue a Note that has matured or been converted,
redeemed or otherwise canceled (except for registration of transfer,
exchange or replacement thereof).
You may present Notes for conversion at the office of the
Conversion Agent and for exchange or registration of transfer at the office
of the Registrar. Each such agent shall initially be the Trustee.
FORM, DENOMINATION AND REGISTRATION
The Notes were issued in registered book-entry form, without
coupons, in denominations of $1,000 principal amount at maturity and
integral multiples thereof. The Notes are represented by one or more global
Notes without coupons (each, a "Global Note") which were deposited with a
custodian for and registered in the name of a nominee of The Depository
Trust Company ("DTC") in New York, New York. Beneficial interests in any
such Global Note will be shown on, and transfers thereof will be effected
only through, records maintained by DTC and its direct and indirect
participants, and any such interest may not be exchanged for Notes in
certificated form except in the limited circumstances described herein.
No service charge will be made for any registration of transfer
or exchange of Notes, but we may require payment by a holder of a sum
sufficient to cover any tax, assessment or other governmental charge
payable in connection therewith.
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Ownership of beneficial interests in a Global Note will be
limited to persons who have accounts with DTC ("participants") or persons
who hold interests directly or indirectly through DTC participants.
Ownership of beneficial interests in the Global Notes will be shown on, and
the transfer of that ownership will be effected through DTC participants
and will be shown on, records maintained by DTC (with respect to interests
of participants) and the records of participants (with respect to interests
of persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder
of a Global Note, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by such Global
Note for all purposes under the Indenture and the Notes. No beneficial
owner of an interest in a Global Note will be able to transfer that
interest except in accordance with DTC's applicable procedures (in addition
to those under the Indenture referred to herein). If DTC or any successor
depository notifies us that it is unwilling or unable to continue as
depository for a Global Note or ceases to be a "Clearing Agency" registered
or in good standing under the Exchange Act or other applicable statute or
regulation and a successor depository is not appointed by us within 90
days, or an Event of Default has occurred and is continuing, DTC
participants in such Global Note will receive physical delivery of Notes in
certificated form and will be considered to be the owners or Holders of
such Notes under the Indenture or the Notes.
Payments on Global Notes will be made to DTC or its nominee, as
the registered owner thereof. None of the Company, the Trustee or any
Paying Agent will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in the Global Notes or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment in
respect of a Global Note held by it or its nominee, will credit
participants' accounts with payment in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Note
as shown on the records of DTC or its nominee. We also expect that payments
by participants to owners of beneficial interests in such Global Note held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the
accounts of customers registered in the names of nominees for such
customers. Such payments, however, will be the responsibility of such
participants.
Transfers between participants in DTC will be effected in
accordance with DTC rules and will be settled in same-day funds. The laws
of some states, however, require that certain persons take physical
delivery of securities in definitive form. Notes will only be delivered in
certificated form in the limited circumstances described therein.
Consequently, the ability to transfer Notes evidenced by the Global Note
will be limited to such extent.
DTC will take any action permitted to be taken by a holder of
Notes (including the presentation of Notes for exchange as described below)
only at the direction of one or more participants to whose account
interests in the Global Notes are credited and only in respect of such
portion of the aggregate principal amount of the Notes as to which such
participant or participants has or have given such direction. However, if
there is an Event of Default under the Notes, DTC will exchange the Global
Notes for Notes in certificated form, which it will distribute to its
participants.
In case any Note shall become mutilated, defaced, destroyed, lost
or stolen, we will execute and upon the Company's request the Trustee will
authenticate and deliver a new Note, of like tenor (including the same date
of issuance) and equal principal amount at maturity, registered in the same
manner, dated the date of its authentication in exchange and substitution
for such Note (upon surrender and cancellation thereof) or in lieu of and
substitution for such Note. In case such Note is destroyed, lost or stolen,
the applicant for a substituted Note shall furnish to us and the Trustee
such security or indemnity as may be required by them to hold each of them
harmless, and, in every case of destruction, loss or theft of such Note,
the applicant shall also furnish to us satisfactory evidence of the
destruction, loss or theft of such Note and of the ownership thereof. Upon
the issuance of any substituted Note, we may require the payment by the
registered holder thereof of a sum sufficient to cover fees and expenses
connected therewith.
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Holders who desire to convert their Notes into common stock
pursuant to the terms of the Notes should contact their brokers or other
participants to obtain information on procedures, including proper forms
and cut-off times, for submitting such requests.
SUBORDINATION OF NOTES
The Notes are unsecured obligations of the Company and are
subordinated in right of payment to the prior payment in full in cash or
other payment satisfactory to holders of Senior Indebtedness of all our
existing and future Senior Indebtedness.
At December 31, 1999 the notes were subordinated to $15.1 million
of Senior Indebtedness and effectively subordinated to $10.8 million of
other indebtedness of our subsidiaries. The Indenture does not restrict the
incurrence by us or our subsidiaries of indebtedness or other obligations.
The term "Senior Indebtedness" means:
(1) the principal, premium, if any, interest and all other
amounts owed in respect of all the Company's (A)
indebtedness for money borrowed and (B) indebtedness
evidenced by securities, debentures, bonds or other similar
instruments;
(2) all obligations of the Company (including all interest
accruing after the commencement of any bankruptcy or similar
proceeding, whether or not a claim for post-petition
interest is allowed as a claim in any such proceeding)
payable under the Credit Agreement, whether outstanding on
the date of the Indenture or thereafter created, incurred,
assumed, guaranteed or in effect guaranteed by the Company;
(3) all of the Company's capital lease obligations;
(4) all obligations issued or assumed by the Company as the
deferred purchase price of property, all of the Company's
conditional sale obligations and all of the Company's
obligations under any title retention agreement (but
excluding trade accounts payable arising in the ordinary
course of business);
(5) all of the Company's obligations for the reimbursement of
any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction;
(6) all obligations of the type referred to in clauses (1)
through (5) above of other persons for the payment of which
the Company is responsible or liable as obligor, guarantor
or otherwise; and
(7) all obligations of the type referred to in clauses (1)
through (6) above of other persons secured by any lien on
any of the Company's properties or assets (whether or not
such obligation is assumed by the Company),
except for (x) any such indebtedness that is by its terms subordinated to
or pari passu with the Notes and (y) any indebtedness between or among the
Company or affiliates of the Company, including all other debt securities
and guarantees in respect of those debt securities issued to any trust, or
trustees of such trust, partnership or other entity affiliated with the
Company that is, directly or indirectly, a financing vehicle of the Company
(a "Financing Entity") in connection with the issuance by such Financing
Entity of preferred securities or other securities that rank pari passu
with, or junior to, the Notes.
"Credit Agreement" means that certain Credit Agreement dated as
of July 23, 1997 by and among the Company and the lenders party thereto
from time to time and The Chase Manhattan Bank, as Administrative Agent,
and the other financial institutions named therein as Co-Agents, including
any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
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restated, modified, increased, renewed, refunded, replaced or refinanced
from time to time, whether or not with the same parties.
Such Senior Indebtedness shall continue to be Senior Indebtedness
and entitled to the benefits of the subordination provisions irrespective
of any amendment, modification or waiver of any term of such Senior
Indebtedness.
By reason of such subordination, in the event of dissolution,
insolvency, bankruptcy or other similar proceedings, or upon any winding
up, liquidation or dissolution, in each case whether voluntary or
involuntary, upon any payment or distribution of our assets or securities,
(1) the holders of the Notes are required to pay over their
share of such payment or distribution to the holders of
Senior Indebtedness or their representative for application
to the payment of all Senior Indebtedness remaining unpaid,
to the extent necessary to pay all holders of Senior
Indebtedness in full in cash or other payment satisfactory
to the holders of Senior Indebtedness; and
(2) unsecured creditors of ours who are not holders of Notes or
Senior Indebtedness may recover less, ratably, than holders
of Senior Indebtedness of ours and may recover more,
ratably, than the holders of Notes.
In addition, no payment of the principal amount, Redemption
Price, Change in Control Purchase Price, conversion consideration or
interest or other obligations with respect to any Notes may be made by us,
nor may we redeem, acquire or defease any Notes, if:
(1) any payment default on any Senior Indebtedness has occurred
and is continuing; or
(2) any default (other than a payment default) with respect to
Senior Indebtedness occurs and is continuing that permits
the acceleration of the maturity thereof and either such
default is the subject of judicial proceedings or we receive
a written notice of such default (a "Senior Indebtedness
Default Notice"); provided, however, that only a holder of
more than $10 million of Senior Indebtedness can provide a
Senior Indebtedness Default Notice.
Notwithstanding the foregoing, payments with respect to the Notes
may resume and we may acquire Notes for cash when:
(a) the default with respect to the Senior Indebtedness is cured
or waived or ceases to exist; or
(b) in the case of a default described in (2) above, 179 or more
days pass after the Senior Indebtedness Default Notice is
received by us, provided that the terms of the Indenture
otherwise permit the payment or acquisition of the Notes at
that time.
If we receive a Senior Indebtedness Default Notice, then a
similar notice received within nine months thereafter relating to the same
default on the same issue of Senior Indebtedness shall not be effective to
prevent the payment or acquisition of the Notes as provided above. In
addition, no payment or distribution may be made on the Notes if any Notes
are declared due and payable prior to their Stated Maturity by reason of
the occurrence of an Event of Default until the earlier of:
(1) 120 days after the date of such acceleration; or
(2) the payment in full in cash of all Senior Indebtedness,
but only if such payment or distribution is then otherwise
permitted under the terms of the Indenture.
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Upon any payment or distribution of our assets or securities to
creditors upon any dissolution, winding up, liquidation or reorganization
of us, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other similar proceedings, the holders of all Senior
Indebtedness shall first be entitled to receive payment in full, in cash or
other payment satisfactory to the holders of Senior Indebtedness, of all
amounts due or to become due thereon before the holders of the Notes shall
be entitled to receive any payment or distribution with respect to any
Notes.
The Notes are effectively subordinated to all existing and future
liabilities of our subsidiaries. Any right of ours to receive assets of any
of our subsidiaries upon their liquidation or reorganization (and the
consequent right of the holders of the Notes to participate in those
assets) will be subject to the claims of that subsidiary's creditors
(including trade creditors), except to the extent that we ourselves are
recognized as a creditor of that subsidiary, in which case our claims would
still be subordinate to any security interests in the assets of that
subsidiary and any indebtedness of that subsidiary senior to that held by
us.
CONVERSION RIGHTS
A holder of a Note is entitled to convert it into shares of
common stock at any time before the close of business on December 15, 2006,
provided, however, that if a Note is called for redemption, the holder is
entitled to convert it at any time before the close of business on the
Redemption Date. A Note in respect of which a holder has delivered a Change
in Control Purchase Notice (as defined below) exercising the option of such
holder to require the Company to purchase such Note may be converted only
if such notice is withdrawn by a written notice of withdrawal delivered by
the holder to the Paying Agent prior to the close of business on the Change
in Control Purchase Date, in accordance with the terms of the Indenture.
The initial Conversion Rate for the Notes is 20.7512 shares of
common stock per $1,000 principal amount (equivalent to a conversion price
of $48.19 per share of common stock), subject to adjustment upon the
occurrence of certain events described below. See "Price Range of Common
Stock." A holder otherwise entitled to a fractional share of common stock
will receive cash in an amount equal to the market value of such fractional
share based on the closing sale price on the trading day immediately
preceding the Conversion Date, subject to the subordination provisions. A
holder may convert a portion of such holder's Notes so long as such portion
is $1,000 principal amount or an integral multiple thereof.
To convert a Note, a holder must:
(1) complete and manually sign the conversion notice on the back
of the Note (or complete and manually sign a facsimile
thereof) and deliver such notice to the Conversion Agent
(initially the Trustee) at the office maintained by the
Conversion Agent for such purpose;
(2) surrender the Note to the Conversion Agent;
(3) if required, furnish appropriate endorsements and transfer
documents; and
(4) if required, pay all transfer or similar taxes.
Pursuant to the Indenture, the date on which all of the foregoing
requirements have been satisfied is the Conversion Date.
Upon conversion of a Note, a holder will not receive (except as
provided below) any cash payment representing accrued interest thereon. The
Company's delivery to the holder of the fixed number of shares of common
stock into which the Note is convertible (together with the cash payment,
if any, in lieu of any fractional shares) will satisfy the Company's
obligation to pay the principal amount of the Note, and the accrued and
unpaid interest to the Conversion Date. Thus, such accrued interest will be
deemed to be paid in full rather than cancelled, extinguished or forfeited.
Notwithstanding the foregoing, accrued but unpaid cash interest will be
payable upon any conversion of Notes at the option of the holder made
concurrently with or after acceleration of the Notes following
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an Event of Default described under "--Events of Default; Notice and
Waiver" below, subject to the subordination provisions. Notes surrendered
for conversion 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 Notes to be redeemed on a
date within such period) must be accompanied by payment of an amount equal
to the interest thereon that the registered holder is to receive. Except
where Notes surrendered for conversion must be accompanied by payment as
described above, no interest on converted Notes will be payable by us on
any Interest Payment Date subsequent to the date of conversion. The
Conversion Rate will not be adjusted at any time during the term of the
Notes for accrued interest.
A certificate for the number of full shares of common stock into
which any Note is converted (and cash in lieu of any fractional shares)
will be delivered as soon as practicable, but in any event no later than
the seventh Business Day following the Conversion Date. For a summary of
the U.S. federal income tax treatment of a holder receiving common stock
upon conversion, see "Certain United States Federal Tax
Consequences--Certain Federal Income Tax Consequences to U.S.
Holders--Conversion of the Notes."
The Conversion Rate is subject to adjustment in certain events,
including
(a) the issuance of shares of common stock as a dividend or a
distribution with respect to common stock;
(b) subdivisions, combinations and reclassification of common
stock;
(c) the issuance to all holders of common stock of rights or
warrants entitling them (for a period not exceeding 45 days)
to subscribe for shares of common stock at less than the
then Market Price (as defined below) of the common stock;
(d) the distribution to holders of common stock of evidences of
our indebtedness, securities or capital stock, cash or
assets (including securities, but excluding those rights,
warrants, dividends and distributions referred to above and
dividends and distributions paid exclusively in cash);
(e) the payment of dividends (and other distributions) on common
stock paid exclusively in cash, excluding cash dividends if
the aggregate amount thereof, when taken together with (1)
other all-cash distributions made within the preceding 12
months not triggering a Conversion Rate adjustment and (2)
any cash and the fair market value, as of the expiration of
the tender or exchange offer referred to below, of
consideration payable in respect of any tender or exchange
offer by us or one of our subsidiaries for the common stock
concluded within the preceding 12 months not triggering a
Conversion Rate adjustment, does not exceed 10% of our
aggregate market capitalization (such aggregate market
capitalization being the product of the current market price
of common stock as of the trading day immediately preceding
the date of declaration of such dividend multiplied by the
number of shares of common stock then outstanding) on the
date of such distribution; and
(f) payment to holders of common stock in respect of a tender or
exchange offer (other than an odd-lot offer) by us or one of
our subsidiaries for common stock as of the trading day next
succeeding the last date tenders or exchanges may be made
pursuant to such tender or exchange offer which involves an
aggregate consideration that, together with (1) any cash and
the fair market value of other consideration payable in
respect of any tender or exchange offer by us or one of our
subsidiaries for the common stock concluded within the
preceding 12 months and (2) the aggregate amount of any
all-cash distributions to all holders of our common stock
made within the preceding 12 months, exceeds 10% of our
aggregate market capitalization.
However, no adjustment need be made if holders may participate in
the transactions otherwise giving rise to an adjustment on a basis and with
notice that our Board of Directors determines to be fair and appropriate,
or in certain other cases specified in the Indenture. Any adjustment that
would otherwise be required to be made shall be
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carried forward and taken into account in a subsequent adjustment. No
adjustment of the conversion price will result in zero or in a negative
number or will reduce the conversion price below the then par value of the
common stock (in which case the conversion price would be reduced to such
par value), unless the common stock has no par value at such time (in which
case the conversion price would be reduced to $.01 per share). In cases
where the fair market value of the portion of assets, debt securities or
rights, warrants or options to purchase our securities applicable to one
share of common stock distributed to stockholders exceeds the Average Sale
Price per share of common stock, or such Average Sale Price exceeds such
fair market value of such portion of assets, debt securities or rights,
warrants or options so distributed by less than $1.00, rather than being
entitled to an adjustment in the Conversion Rate, the holder of a Note upon
conversion thereof will be entitled to receive, in addition to the shares
of common stock into which such Note is convertible, the kind and amounts
of assets, debt securities or rights, options or warrants comprising the
distribution that such holder would have received if such holder had
converted such Note immediately prior to the record date for determining
the stockholders entitled to receive the distribution, subject to the
subordination provisions. The Indenture permits us to increase the
Conversion Rate from time to time. "Market Price" means, on any date in
question, subject to certain adjustments, the average of the daily closing
prices for the 10 consecutive trading days immediately preceding the date
in question.
In the event that we become a party to any transaction
(including, and with certain exceptions,
(a) any recapitalization or reclassification of the common
stock;
(b) any consolidation of us with, or merger of us into, any
other Person, or any merger of another Person into us;
(c) any sale, transfer or lease of all or substantially all of
our assets; or
(d) any compulsory share exchange),
in which the common stock is converted into the right to receive other
securities, cash or other property (each of the foregoing being referred to
as a "Transaction"), then the holders of Notes then outstanding will have
the right to convert the Notes into the kind and amount of securities, cash
or other property receivable upon the consummation of such Transaction by a
holder of the number of shares of common stock issuable upon conversion of
such Notes immediately prior to such Transaction, subject to the
subordination provisions.
In the case of a Transaction, each Note will become convertible
into the securities, cash or property receivable by a holder of the number
of shares of the common stock into which such Note was convertible
immediately prior to such Transaction, subject to the subordination
provisions. This change could substantially lessen or eliminate the value
of the conversion privilege associated with the Notes in the future. For
example, if we were acquired in a cash merger, each Note would become
convertible solely into cash and would no longer be convertible into
securities whose value would vary depending on our future prospects and
other factors.
In the event of a taxable distribution to holders of common stock
which results in an adjustment of the Conversion Rate (or in which holders
otherwise participate) or in the event the Conversion Rate is increased at
our discretion, the holders of the Notes may, in certain circumstances, be
deemed to have received a distribution subject to United States federal
income tax as a dividend. Moreover, in certain other circumstances, the
absence of such an adjustment to the Conversion Rate may result in a
taxable dividend to holders of common stock. See "Certain United States
Federal Tax Consequences--Certain Federal Income Tax Consequences to U.S.
Holders--Adjustment of Conversion Price."
REDEMPTION OF NOTES AT THE OPTION OF THE COMPANY
No sinking fund is provided for the Notes. Prior to December 15,
2002, we are not entitled at our option to redeem the Notes. On and after
that date, we will be entitled to redeem the Notes for cash as a whole at
any time, or from time to time in part, upon not less than 30 days' nor
more than 60 days' notice of redemption given by mail to holders of Notes
(unless a shorter notice shall be satisfactory to the Trustee) at the
Redemption Prices set forth
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below plus accrued cash interest to the Redemption Date. Any such
redemption must be in integral multiples of $1,000 principal amount.
The table below shows Redemption Prices of a Note per $1,000
principal amount if redeemed during the twelve-month periods set forth
below.
PERIOD REDEMPTION
------ ----------
PRICE
-----
December 15, 2002 through December 14, 2003............ 102.2857%
December 15, 2003 through December 14, 2004............ 101.7143%
December 15, 2004 through December 14, 2005............ 101.1429%
December 15, 2005 and thereafter....................... 100.5714%
If fewer than all of the Notes are to be redeemed, the Trustee
will select the Notes to be redeemed in principal amounts at maturity of
$1,000 or integral multiples thereof by lot, pro rata or by another method
the Trustee considers fair and appropriate. If a portion of a holder's
Notes is selected for partial redemption and that holder converts a portion
of those Notes prior to the redemption, the converted portion shall be
deemed, solely for purposes of determining the aggregate principal amount
of the Notes to be redeemed by the Company, to be of the portion selected
for redemption.
CHANGE IN CONTROL PERMITS PURCHASE OF NOTES AT THE OPTION OF THE HOLDER
In the event of any Change in Control (as defined below) of the
Company, each holder of Notes will have the right, at the holder's option,
subject to the terms and conditions of the Indenture, to require us to
purchase all or any part (provided that the principal amount must be $1,000
or an integral multiple thereof) of the holder's Notes on the date that is
45 business days after the occurrence of such Change in Control (the
"Change in Control Purchase Date") at a cash price equal to 100% of the
principal amount of such holder's Notes plus accrued cash interest to the
Change in Control Purchase Date (the "Change in Control Purchase Price").
Within 25 business days after the Change in Control, we will mail
to the Trustee and to each holder (and to beneficial owners as required by
applicable law) a notice regarding the Change in Control, which notice
shall state, among other things:
(1) the date of such Change in Control and, briefly, the events
causing such Change in Control;
(2) the date by which the Change in Control Purchase Notice (as
defined below) must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) the name and address of the Paying Agent and the Conversion
Agent;
(6) the Conversion Rate and any adjustments thereto;
(7) the procedures that holders must follow to exercise these
rights;
(8) the procedures for withdrawing a Change in Control Purchase
Notice;
(9) that holders who want to convert Notes must satisfy the
requirements set forth in the Notes; and
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(10) briefly, the conversion rights of holders of Notes.
To exercise the purchase right, the holder must deliver written
notice of the exercise of such right (a "Change in Control Purchase
Notice") to the Paying Agent or an office or agency maintained by us for
such purpose in the Borough of Manhattan, The City of New York, prior to
the close of business, on the Change in Control Purchase Date. Any Change
in Control Purchase Notice must state
(1) the certificate numbers of the Notes to be delivered by the
holder thereof for purchase by us;
(2) the portion of the principal amount of Notes to be
purchased, which portion must be $1,000 or an integral
multiple thereof; and
(3) that such Notes are to be purchased by us pursuant to the
applicable provisions of the Notes.
Any Change in Control Purchase Notice may be withdrawn by the
holder by a written notice of withdrawal delivered to the Paying Agent
prior to the close of business on the Change in Control Purchase Date. The
notice of withdrawal shall state the principal amount and the certificate
numbers of the Notes as to which the withdrawal notice relates and the
principal amount, if any, which remains subject to a Change in Control
Purchase Notice.
Payment of the Change in Control Purchase Price for a Note for
which a Change in Control Purchase Notice has been delivered and not
withdrawn is conditioned upon delivery of the Note (together with necessary
endorsements) to the Paying Agent or an office or agency maintained by us
for such purpose in the Borough of Manhattan, The City of New York, at any
time (whether prior to, on or after the Change in Control Purchase Date)
after the delivery of such Change in Control Purchase Notice. Payment of
the Change in Control Purchase Price for the Note will be made promptly
following the later of the business day following the Change in Control
Purchase Date and the time of delivery of the Note. If the Paying Agent
holds, in accordance with the terms of the Indenture, money sufficient to
pay the Change in Control Purchase Price of such Note on the business day
following the Change in Control Purchase Date, then, immediately after the
Change in Control Purchase Date, such Note will cease to be outstanding and
interest on such Note will cease to accrue and will be deemed paid, whether
or not such Note is delivered to the Paying Agent, and all other rights of
the holder shall terminate (other than the right to receive the Change in
Control Purchase Price upon delivery of such Note).
Under the Indenture, a "Change in Control" of the Company is
deemed to have occurred upon the occurrence of any of the following events:
(1) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a Person shall be deemed
to have "beneficial ownership" of all securities that such
Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total
outstanding voting stock of the Company;
(2) the Company consolidates with, or merges with or into
another Person or conveys, transfers, leases or otherwise
disposes of all or substantially all of the Company's assets
to any Person, or any Person consolidates with or merges
with or into the Company, in any such event pursuant to a
transaction in which the outstanding voting stock of the
Company is converted into or exchanged for cash, securities
or other property, other than any such transaction where:
(a) the voting stock of the Company is not converted or
exchanged at all (except to the extent necessary to
reflect a change in our jurisdiction of incorporation)
or is converted into or exchanged for (i) voting stock
(other than Redeemable Capital
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Stock) of the surviving or transferee corporation or
(ii) voting stock (other than Redeemable Capital Stock)
of the surviving or transferee corporation and cash,
securities and other property (other than capital stock
of the surviving entity); and
(b) immediately after such transaction, no "person" or
"group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) is the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a Person shall be deemed to have
"beneficial ownership" of all securities that such
Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of
time), directly or indirectly, of more than 50% of the
total outstanding voting stock of the surviving or
transferee corporation;
(3) during any consecutive two-year period, individuals who at
the beginning of such period constituted the Company's Board
of Directors (together with any new directors whose election
to such Board of Directors, or whose nomination for election
by the Company's stockholders, was approved by a vote of 66
2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Company's
Board of Directors then in office; or
(4) the Company is liquidated or dissolved or a special
resolution is passed by the Company's stockholders approving
the plan of liquidation or dissolution other than in a
transaction which complies with the provisions described
under "Consolidation, Merger and Sale or Lease of Assets."
"Redeemable Capital Stock" means any class or series of capital
stock that, either by its terms, by the terms of any security into which it
is convertible or exchangeable or by contract or otherwise, is, or upon the
happening of an event or passage of time would be, required to be redeemed
prior to the final stated maturity of the Notes or is redeemable at the
option of the holder hereof at any time prior to such final stated
maturity, or is convertible into or exchangeable for debt securities at any
time prior to such final stated maturity; provided, however, that
Redeemable Capital Stock shall not include any common stock the holder of
which has a right to be put to us upon certain terminations of employment;
and provided further, however, that any class or series of capital stock
that would not constitute Redeemable Capital Stock but for provisions
thereof giving holder thereof the right to require the issuer of such
capital stock to repurchase or redeem such capital stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
final stated maturity of the Notes shall not constitute Redeemable Capital
Stock if the "asset sale" or "change of control" provisions applicable to
such class or series of capital stock are no more favorable to the holders
of such capital stock in any material respect than the provisions contained
herein under this caption and such class or series of capital stock
specifically provides that the issuer of such capital stock will not
repurchase or redeem any such stock pursuant to such provision prior to our
repurchase of such notes as required pursuant to the provisions contained
herein under this caption.
The Indenture does not permit the Board of Directors to waive our
obligation to purchase Notes at the option of a holder in the event of a
Change in Control of our Company.
We will comply with the provisions of Rule 13e-4, Rule 14e-1 and
any other tender offer rules under the Exchange Act which may then be
applicable, and will file Schedule 13E-4 or any other schedule required
thereunder in connection with any offer by us to purchase Notes at the
option of the holders thereof upon a Change in Control. In certain
circumstances, the Change in Control purchase feature of the Notes may make
more difficult or discourage a takeover of our company and, thus, the
removal of incumbent management. The Change in Control purchase feature,
however, is not the result of our knowledge of any specific effort to
accumulate shares of common stock or to obtain control of our company by
means of a merger, tender offer, solicitation or otherwise, or part of a
plan by us to adopt a series of anti-takeover provisions. Instead, the
Change in Control purchase feature is the result from negotiations between
us and the Initial Purchasers.
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The Company's debt agreements contain "change in control"
provisions that in relevant part are similar to the provision in the
Indenture relating to a Change in Control, and the occurrence of such a
"change of control" would constitute a default under the debt agreements.
The Company's obligations under the debt agreements are senior in right of
payment to the notes and the debt agreements will not permit the purchase
of the notes absent consent of the lenders under the debt agreements in the
event of a Change in Control, even though the failure by the Company to
comply with its obligations in the event of a Change in Control would
constitute an Event of Default under the Indenture. In addition, the
exercise by the Holders of their right to require the Company to repurchase
the notes could cause a default under the debt agreements, even if the
Change in Control itself does not, due to the financial effect of such
repurchase on the Company. If the Company is unable to obtain the requisite
consents and/or repay all Indebtedness which prohibits the repurchase of
the notes upon the occurrence of a Change in Control, the Company would
remain prohibited by such Indebtedness from purchasing any notes and, as a
result, the Company could not purchase the Notes, which would constitute an
Event of Default under the Indenture. Such an Event of Default under the
Indenture would also constitute an Event of Default under the debt
agreements which would permit the lenders thereunder to accelerate all of
the Company's Indebtedness under the debt agreements. If a Change in
Control were to occur, there can be no assurance that the Company would
have sufficient assets to first satisfy its obligations under the debt
agreements or other agreements relating to any Indebtedness, if
accelerated, and then to purchase all of the notes that might be delivered
by Holders seeking to exercise the purchase right.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
We entered into a registration rights agreement with the Initial
Purchasers (the "Registration Rights Agreement") pursuant to which, for the
benefit of the holders, we agreed to file with the SEC the Shelf
Registration Statement at our expense covering resale of the Registrable
Securities as soon as practicable, but in any event within 90 days after
the first date of original issuance of the Notes. We will use all
reasonable efforts to cause the Shelf Registration Statement to become
effective as promptly as is practicable, but in any event within 180 days
of such first date of original issuance and to keep the Shelf Registration
Statement effective until the earlier of:
o the sale pursuant to the Shelf Registration Statement of all
the securities registered thereunder and
o the expiration of the holding period applicable to such
securities held by persons that are not affiliates of the
Company under Rule 144(k) under the Securities Act or any
successor provision, subject to certain permitted
exceptions.
We are permitted to suspend the use of the prospectus that is
part of the Shelf Registration Statement under certain circumstances
relating to pending corporate developments, public filings with the SEC and
similar events for a period not to exceed an aggregate of 90 days in any
12-month period. We agreed to pay predetermined liquidated damages as
described herein ("Liquidated Damages") to holders of Notes and holders of
common stock issued upon conversion of the Notes if the Shelf Registration
Statement is not timely filed or made effective or if the prospectus is
unavailable for the periods in excess of those permitted above. Such
Liquidated Damages shall accrue until such failure to file or become
effective or unavailability is cured:
o in respect of any Note, at a rate per annum equal to 0.25%
of the principal amount of the Notes for the first 90 day
period after the occurrence of such event and 0.25% for each
90 day period thereafter, provided that the maximum amount
of Liquidated Damages will in no event exceed 1.0% per annum
of the principal amount of the Notes,
o in respect of any shares of common stock into which the
Notes have been converted, at a rate per annum equal to
$2.50 per 20.7512 shares of common stock (subject to
adjustment in certain circumstances) for the first 90 day
period after the occurrence of such event and $2.50 per
20.7512 shares of common stock (subject to adjustment) for
each 90 day period thereafter,
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provided that the maximum amount of Liquidated Damages will
in no event exceed $10.00 per 20.7512 shares of common stock
(subject to adjustment).
A holder who elects to sell any Notes and common stock issued
upon conversion of the Notes pursuant to the Shelf Registration Statement
generally will be required to be named as a selling stockholder in the
related prospectus, may be required to deliver a prospectus to purchasers,
may be subject to certain civil liability provisions under the Securities
Act in connection with those sales and will be bound by certain provisions
of the Registration Rights Agreement that are applicable to such holder
(including certain indemnification provisions). We will pay all expenses of
the Shelf Registration Statement, provide to each registered holder copies
of such prospectus, notify each registered holder when the Shelf
Registration Statement has become effective and take certain other actions
as are required to permit, subject to the foregoing, unrestricted resales
of the Notes and the common stock issued upon conversion of the Notes.
We have agreed to pay Liquidated Damages in the amount set forth
above to such holder if the Company fails to make such filing in the time
required or, if such filing is a post-effective amendment to the Shelf
Registration Statement required to be declared effective under the
Securities Act, if such amendment is not declared effective within 45 days
of the filing thereof, subject to certain exceptions. By acquiring
Registrable Securities, a Holder will be deemed to have agreed to indemnify
the Company against certain losses arising out of information furnished by
such holder in writing for inclusion in any Shelf Registration Statement.
Holders of Notes will also be required to suspend their use of the
prospectus included in the Shelf Registration Statement under certain
circumstances upon receipt of written notice to that effect from the
Company.
The summary herein of certain provisions of the Registration
Rights Agreement is subject to, and is qualified in its entirety by
reference to, all the provisions of the Registration Rights Agreement, a
copy of which is filed as an exhibit to the Registration Statement of which
this prospectus is a part.
CONSOLIDATION, MERGER AND SALE OR LEASE OF ASSETS
We, without the consent of any holders of outstanding Notes, are
entitled to consolidate with or merge into or transfer or lease our assets
substantially as an entirety to, any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof (each a "Person"), and any Person is entitled to
consolidate with or merge into, or transfer or lease its assets
substantially as an entirety to us, provided that:
(1) the Person (if other than us) formed by such consolidation
or into which we are merged or the Person which acquires or
leases our assets substantially as an entirety is a
corporation, partnership, limited liability company or trust
organized and existing under the laws of any United States
jurisdiction and expressly assumes our obligations on the
Notes and under the Indenture;
(2) immediately after giving effect to such transaction no Event
of Default (as defined below), and no event which, after
notice or lapse of time or both, would become an Event of
Default, happened and is continuing; and
(3) certain other conditions described in the Indenture are met.
EVENTS OF DEFAULT; NOTICE AND WAIVER
The Indenture provides that, if an Event of Default specified
therein occurs and is continuing, either the Trustee or the holders of not
less than 25% in aggregate principal amount of the Notes then outstanding
may declare the principal amount of and accrued interest to the date of
such declaration on all the Notes to be immediately due and payable. In the
case of certain events of bankruptcy or insolvency, the principal amount of
and accrued interest on all the Notes to the date of the occurrence of such
event shall automatically become and be
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immediately due and payable. Upon any such acceleration, the subordination
provisions of the Indenture preclude any payment being made to holders of
Notes until the earlier of:
(1) 120 days or more after the date of such acceleration; and
(2) the payment in full in cash of all Senior Indebtedness,
but only if such payment is then otherwise permitted under the
terms of the Indenture. See "--Subordination of Notes" above.
Under certain circumstances, the holders of a majority in
aggregate principal amount of the outstanding Notes may rescind any such
acceleration with respect to the Notes and its consequences. Interest shall
accrue and be payable on demand upon a default in the payment of principal
interest when due, Redemption Price, Change in Control Purchase Price or
shares of common stock (or cash in lieu of fractional shares) to be
delivered on conversion of Notes, in each case to the extent that the
payment of such interest shall be legally enforceable.
Under the Indenture, Events of Default include:
(1) default in payment of the principal amount, interest when
due (if such default in payment of interest shall continue
for 31 days), Redemption Price, or Change in Control
Purchase Price with respect to any Note, when the same
becomes due and payable (whether or not any such payment is
prohibited by the provisions of the Indenture);
(2) failure by the Company to deliver shares of common stock
(together with cash in lieu of fractional shares) when such
common stock (or cash in lieu of fractional shares) is
required to be delivered following conversion of a Note and
continuation of such default for 10 days;
(3) failure by the Company to comply with any of its other
agreements in the Notes or the Indenture upon the receipt by
the Company of notice of such default from the Trustee or
from holders of not less than 25% in aggregate principal
amount of the Notes then outstanding and the Company's
failure to cure such default within 90 days after receipt by
the Company of such notice;
(4) default under any bond, note or other evidence of
indebtedness for money borrowed of the Company having an
aggregate outstanding principal amount of in excess of $12.5
million, which default shall have resulted in such
indebtedness being accelerated, without such indebtedness
being discharged or such acceleration having been rescinded
or annulled within 60 days after receipt of notice thereof
by the Company from the Trustee or the Company and the
Trustee from the holders of not less than 25% in aggregate
principal amount of the Notes then outstanding (unless such
default has been cured or waived); or
(5) certain events of bankruptcy or insolvency.
The Trustee will, within 90 days after the occurrence of any
default, mail to all holders of the Notes notice of all defaults of which
the Trustee shall be aware, unless such defaults shall have been cured or
waived before the giving of such notice; provided that the Trustee may
withhold such notice as to any default other than a payment default, if it
determines in good faith that withholding the notice is in the interests of
the holders.
The holders of a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee, provided that such direction shall not
be in conflict with any law or the Indenture and subject to certain other
limitations. The Trustee may refuse to perform any duty or exercise any
right or power or extend or risk its own funds or otherwise incur any
financial liability unless it receives indemnity satisfactory to it against
any loss, liability or expense. No holder of any Note will have any right
to pursue any remedy with respect to the Indenture or the Notes, unless:
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(1) such holder shall have previously given the Trustee written
notice of a continuing Event of Default;
(2) the holders of at least 25% in aggregate principal amount of
the outstanding Notes shall have made a written request to
the Trustee to pursue such remedy;
(3) such holder or holders shall have offered to the Trustee
reasonable security or indemnity against any loss, liability
or expense satisfactory to it;
(4) the Trustee shall have failed to comply with the request
within 60 days after receipt of such notice, request and
offer of security or indemnity; and
(5) the holders of a majority in aggregate principal amount of
the outstanding Notes shall not have given the Trustee a
direction inconsistent with such request within 60 days
after receipt of such request.
The right of any holder (a) to receive payment of principal, the
Redemption Price, Change in Control Purchase Price or interest in respect
of the Notes held by such holder on or after the respective due dates
expressed in the Notes, (b) to convert such Notes, or (c) to bring suit for
the enforcement of any such payment on or after such respective dates or
the right to convert, shall not be impaired or adversely affected without
such holder's consent.
The holders of a majority in aggregate principal amount of Notes
at the time outstanding may waive any existing default and its consequences
except:
(1) any default in any payment on the Notes,
(2) any default with respect to the conversion rights of the
Notes, or
(3) any default in respect of certain covenants or provisions in
the Indenture which may not be modified without the consent
of the holder of each Note as described in "--Modification"
below.
When a default is waived, it is deemed cured and will cease to
exist, but no such waiver shall extend to any subsequent or other default
or impair any consequent right.
We are required to furnish to the Trustee annually a statement as
to any default by the Company in the performance and observance of our
obligations under the Indenture. In addition, we are required to file with
the Trustee written notice of the occurrence of any default or Event of
Default within five business days of our becoming aware of such default or
Event of Default.
MODIFICATION
The Indenture or the Notes may be modified or amended by the
Company and the Trustee with the consent of the holders of not less than a
majority in aggregate principal amount of the Notes then outstanding.
However, without the consent of each holder affected thereby, no amendment
may, among other things:
(1) reduce the principal amount, Change in Control Purchase
Price or Redemption Price with respect to any Note, or
extend the stated maturity of any Note or alter the manner
of payment or rate of interest on any Note or make any Note
payable in money or securities other than that stated in the
Note;
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(2) make any reduction in the principal amount of Notes whose
holders must consent to an amendment or any waiver under the
Indenture or modify the Indenture provisions relating to
such amendments or waivers;
(3) make any change that adversely affects the right of a holder
to convert any Note;
(4) modify the provisions of the Indenture relating to the
ranking of the Notes in a manner adverse to the holders of
the Notes; or
(5) impair the right to institute suit for the enforcement of
any payment with respect to, or conversion of, the Notes.
Without the consent of any holder of Notes, the Company and the
Trustee may amend the Indenture to:
(1) cure any ambiguity, defect or inconsistency, provided,
however, that such amendment does not materially adversely
affect the rights of any holder of Notes;
(2) provide for the assumption by a successor to the Company of
the obligations of the Company under the Indenture;
(3) provide for uncertificated Notes in addition to certificated
Notes, as long as such uncertificated Notes are in
registered form for United States federal income tax
purposes;
(4) make any change that does not adversely affect the rights of
any holder of Notes;
(5) make any change to comply with any requirement of the
Commission in connection with the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended;
or
(6) add to the covenants or obligations of the Company under the
Indenture for the protection of holders of the Notes or
surrender any right, power or option conferred by the
Indenture on the Company.
NO RECOURSE AGAINST OTHERS
The Indenture provides that a director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation.
THE TRUSTEE
First Union National Bank is the Trustee, Registrar, Paying Agent
and Conversion Agent under the Indenture. First Union National Bank is also
the lender under our Euro credit agreement.
The Indenture contains certain limitations on the rights of the
Trustee, as a creditor of the Company, to obtain payment of claims in
certain cases (including in the event of an Event of Default), or to
realize on certain property received in respect of any such claims as
security or otherwise. The Trustee will be permitted to engage in other
transactions with the Company and its subsidiaries; provided, however, that
if it acquires any conflicting interest (as defined), it must eliminate
such conflict or resign.
In case an Event of Default shall occur and shall not be cured or
waived, the Trustee will be required to use the degree of care of a prudent
person in the conduct of its own affairs in the exercise of its powers.
Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of
any of the Holders of notes, unless they shall have offered to the Trustee
reasonable security or indemnity.
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GOVERNING LAW
The Indenture, the Notes and the Registration Rights Agreement
provide that they are to be governed in accordance with the laws of the
State of New York, without regard to choice of law provisions.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
This summary highlights certain provisions of our certificate of
incorporation and our by-laws. The following description of our capital
stock is not complete and is qualified in its entirety by the provisions of
our certificate of incorporation, our by-laws, our stockholder rights plan
and applicable law. See "Where You Can Find More Information."
Our certificate of incorporation provides that our authorized
capital stock consists of 300,000,000 shares of common stock, of which
50,889,208 shares were issued and outstanding as of December 31, 1999, and
20,000,000 shares of preferred stock, $.01 par value per share, none of
which were issued and outstanding as of that date. All our outstanding
shares of common stock are validly issued, fully paid and nonassessable.
The common stock issuable upon conversion of the notes will be, when issued
and paid for, fully paid and nonassessable.
COMMON STOCK
Each holder of our common stock is entitled to one vote for each
share owned of record on all matters submitted to a vote of stockholders.
There are no cumulative voting rights. Accordingly, the holders of a
majority of the shares voting for the election of directors can elect all
the directors if they choose to do so, subject to any voting rights of
holders of preferred stock to elect directors. Subject to the preferential
rights of any outstanding series of preferred stock, and to any
restrictions on payment of dividends imposed by our debt agreements, the
holders of common stock will be entitled to those dividends as may be
declared from time to time by our board of directors from funds legally
available therefor, and will be entitled, after payment of all prior
claims, to receive pro rata all of our assets upon our liquidation,
dissolution or winding up. Holders of common stock have no redemption or
conversion rights or preemptive rights to purchase or subscribe for our
securities. Certain provisions of our certificate of incorporation and
by-laws have the effect of making more difficult an acquisition of control
of us in a transaction not approved by our board of directors.
PREFERRED STOCK
Our authorized capital stock includes 20,000,000 shares of
preferred stock, none of which are currently issued or outstanding. Our
board of directors is authorized to divide the preferred stock into series
and, with respect to each series, to determine the preferences and rights
and the qualifications, limitations or restrictions thereof, including the
dividend rights, conversion rights, voting rights, redemption rights and
terms, liquidation preferences, sinking fund provisions, the number of
shares constituting the series and the designation of such series. Our
board of directors could, without stockholder approval, issue preferred
stock with voting and other rights that could adversely affect the voting
power of the holders of common stock and which could have certain
anti-takeover effects.
In connection with the Rights Plan (as defined below), our board
of directors has authorized 400,000 shares of Series A Participating
Preferred Stock (the "Series A Preferred"). No shares of Series A Preferred
are outstanding. For a description of the rights, powers and preferences of
the Series A Preferred, see "--Rights Plan."
RIGHTS PLAN
On June 10, 1997, our board of directors adopted a stockholder
rights plan (the "Rights Plan") pursuant to which one right (collectively,
the "Rights") to purchase one one-thousandth of a share of Series A
Preferred would be distributed as a dividend for each outstanding share of
common stock at a purchase price of $60.00 per one one-thousandth of a
share of Series A Preferred, subject to adjustment. The Rights are issuable
on the terms and subject to the conditions set forth in the Rights Plan.
The Rights will expire no later than June 10, 2007. The Rights will be
exercisable on the earlier to occur of
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o the first date of public announcement that a person or
"group" has acquired beneficial ownership of 15% or more of
the outstanding common stock (except pursuant to a Permitted
Offer, as defined in the Rights Plan) (an "Acquiring
Person"); and
o ten business days (or such later date as the board may
determine) following the commencement of, or announcement of
an intention to commence, a tender offer or exchange offer
the consummation of which would result in a person or group
becoming an Acquiring Person.
If any person or group becomes an Acquiring Person or commences a
tender offer upon consummation of which such person or group would become
an Acquiring Person, each Right not owned by such Acquiring Person or
certain related parties would entitle its holder to purchase, at the
Right's then current exercise price, shares of common stock, or, in the
discretion of the board, the number of one one-thousandths of a share of
Series A Preferred having a value of twice the Right's exercise price. In
addition, if, after a person or group becomes an Acquiring Person, we are
involved in a merger or other business combination transaction in which the
holders of all of the outstanding common stock immediately prior to the
consummation of the transaction are not the holders of the surviving
corporation's voting power or more than 50% of our assets or earning power
is sold or transferred, each Right will entitle its holder to purchase
common shares of the acquiring company having a value equal to two times
the Right's then current exercise price.
The purchase price payable, and the shares issuable, upon
exercise of the Rights will be subject to adjustment from time to time as
specified in the Rights Plan. We will generally be entitled to redeem the
Rights in whole, but not in part, at $.01 per Right at any time prior to
the earlier to occur of a person becoming an Acquiring Person or expiration
of the Rights.
Shares of Series A Preferred purchasable upon exercise of the
Rights will not be redeemable. Each Share of Series A Preferred will be
entitled to a minimum preferential quarterly dividend payment of $10.00 per
share but, if greater, will be entitled to an aggregate dividend per share
of 1,000 times the dividend declared per share of common stock. In the
event of our liquidation, the holders of Series A Preferred will be
entitled to a minimum preferential liquidation payment of $100.00, provided
that they will be entitled to an aggregate payment per share of at least
1,000 times the aggregate payment made per share of common stock. Each
share of Series A Preferred will have one thousand votes, voting together
with the common stock. These rights are protected by customary antidilution
provisions. In the event that the amount of accrued and unpaid dividends on
the Series A Preferred is equivalent to at least six full quarterly
dividends, the holders of the Series A Preferred will have the right,
voting as a class, to elect two directors in addition to the directors
elected by the holders of common stock until all dividends in default on
the Series A Preferred have been paid in full and dividends for the current
dividend period declared and funds therefor set apart.
CLASSIFIED BOARD OF DIRECTORS
Our board of directors is divided into three classes with each
class elected in staggered elections and serving a three year term.
Classification of directors makes it more difficult for stockholders to
change the composition of the board of directors. At least two annual
meetings of stockholders, instead of one, will generally be required to
change who represents the majority of the board of directors. If we are
confronted by a holder attempting to force a proxy contest, a tender or
exchange offer or other extraordinary corporate transaction, this
classification and time period would allow the board sufficient time to
review the proposal. The board would also have the opportunity to review
any available alternatives to the proposal and to act in what it believes
to be the best interests of the stockholders.
LIMITATION OF DIRECTOR LIABILITY
Our certificate of incorporation limits the liability of our
directors to us and our stockholders to the fullest extent permitted by
Delaware law. Specifically, our directors will not be personally liable for
money damages for breach of fiduciary duty as a director, except for
liability
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o for any breach of the director's duty of loyalty to us or
our stockholders;
o for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
o under Section 174 of the Delaware General Corporation Law,
which concerns unlawful payments of dividends, stock
purchases or redemptions; and
o for any transaction from which the director derived an
improper personal benefit.
DELAWARE ANTI-TAKEOVER LAW AND CHARTER AND BY-LAWS PROVISIONS
DELAWARE LAW. We must comply with the provisions of Section 203
of the Delaware General Corporation Law. In general, Section 203 prohibits
a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed
manner.
A "business combination" includes a merger, asset sale or other
transaction resulting in a financial benefit to the interested stockholder.
An "interested stockholder" is a person who, together with affiliates and
associates, owns, or, in some cases, within three years prior, did own, 15%
or more of the corporation's voting stock. Under Section 203, a business
combination between us and an interested stockholder is prohibited unless
it satisfies one of the following three conditions:
o our board of directors must have previously approved either
the business combination or the transaction that resulted in
the stockholder becoming an interested stockholder;
o upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of our voting
stock outstanding at the time the transaction commenced,
excluding, for purposes of determining the number of shares
outstanding, shares owned by persons who are directors and
also officers and employee stock plans, in some instances;
and
o the business combination is approved by our board of
directors and authorized at an annual or special meeting of
the stockholders by the affirmative vote of the holders of
at least 66 2'3% of the outstanding voting stock that is not
owned by the interested stockholder.
SPECIAL MEETINGS. Our by-laws provide that special meetings of
stockholders for any purpose or purposes can be called only upon the
request of our chairman of the board, our president, our board of
directors, or the holders of shares entitled to at least a majority of the
votes at the meeting.
AMENDMENT OF OUR BY-LAWS. To adopt, repeal, alter or amend the
provisions of our by-laws, our by-laws require the affirmative vote of
either the holders of at least a majority of the voting power of all of the
issued and outstanding shares of our capital stock entitled to vote on the
matter or our board of directors.
ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND
PROPOSALS. Our by-laws establish advance notice procedures for stockholders
to make nominations of candidates for election as directors, or bring other
business before an annual meeting of our stockholders.
These procedures provide that only persons who are nominated by
or at the direction of our board of directors, or by a stockholder who has
given timely written notice to our secretary before the meeting at which
directors are to be elected, will be eligible for election as one of our
directors. Further, these procedures provide that at an annual meeting, the
only business that may be conducted is the business that has been specified
in the
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notice of the meeting given by, or at the direction of, our board or
by a stockholder who has given timely written notice to our secretary of
such stockholder's intention to bring that business before the meeting.
Under these procedures, notice of stockholder nominations to be
made or business to be conducted at an annual meeting must be received by
us not less than 60 days nor more than 90 days before the date of the
meeting, or, if less than 70 days' notice or prior public disclosure of the
date of the meeting is given or made to the stockholders, the 10th day
following the earlier of the day notice was mailed or the day public
disclosure was made. Under these procedures, notice of a stockholder
nomination to be made at a special meeting at which directors are to be
elected must be received by us not later than the close of business on the
tenth day following the day on which notice of the date of the special
meeting was mailed or public disclosure of the date of the special meeting
was made, whichever occurs first.
Under our by-laws, a stockholder's notice nominating a person for
election as a director must contain specific information about the proposed
nominee and the nominating stockholder. If our chairman of the board
determines that a nomination was not made in the manner described in our
by-laws, the nomination will be disregarded. Similarly, a stockholder's
notice proposing the conduct of business must contain specific information
about the business and about the proposing stockholder. If our chairman of
the board determines that business was not properly brought before the
meeting in the manner described in our by-laws, the business will not be
conducted.
By requiring advance notice of nominations by stockholders, our
by-laws afford our board of directors an opportunity to consider the
qualifications of the proposed nominee and, to the extent deemed necessary
or desirable by our board of directors, to inform stockholders about these
qualifications. By requiring advance notice of other proposed business, our
by-laws also provide an orderly procedure for conducting annual meetings of
stockholders and, to the extent deemed necessary or desirable by our board
of directors, provides our board of directors with an opportunity to inform
stockholders, before meetings, of any business proposed to be conducted at
the meetings, together with any recommendations as to our board of
directors' position regarding action to be taken with respect to the
business, so that stockholders can better decide whether to attend a
meeting or to grant a proxy regarding the disposition of any business.
The foregoing provisions may have the effect of precluding a
contest for the election of directors or the consideration of stockholder
proposals if the proper procedures are not followed, and of discouraging or
deterring a third party from conducting a solicitation of proxies to elect
its own slate of directors or to approve its own proposal, without regard
to whether consideration of these nominees or proposals might be harmful or
beneficial to us and our stockholders.
Written Consent Provisions. Our by-laws provide that any action
required or permitted to be taken by the holders of capital stock at any
meeting of our stockholders may be taken without a meeting only by the
holders of outstanding capital stock having not less than the minimum
number of votes that would be necessary to authorize or take the action at
a meeting at which all shares entitled to vote were present and voted.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is
ChaseMellon Shareholder Services, L.L.C.
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DESCRIPTION OF OTHER INDEBTEDNESS
The following summary of our debt agreements does not purport to
be complete and is qualified in its entirety by reference to the debt
agreements described below, including the definitions of certain
capitalized terms used herein. Any terms not defined in this section are
defined in the debt agreements. See "Where You Can Find More Information."
REVOLVING CREDIT AGREEMENT
On July 23, 1997, CommScope NC, our wholly owned subsidiary,
entered into a credit agreement (as amended, the "revolving credit
agreement") which provides for a $350 million revolving credit facility
that matures on December 31, 2002. The borrowings under the revolving
credit agreement will be structurally senior to, and will be repaid prior
to, any subordinated indebtedness, including the notes.
INTEREST RATE CALCULATIONS. Interest is payable quarterly, or at
the end of the relevant interest period, if earlier, at a per annum rate
equal to the Adjusted Base Rate for Adjusted Base Rate Loans, or a
Eurodollar Rate for Eurodollar ("LIBOR") Loans, plus in each case, the
relevant applicable margin. We are also able to set interest rates through
a competitive bid procedure.
The Adjusted Base Rate is a fluctuating rate calculated on a
daily basis as the highest of:
o the rate of interest publicly announced by The Chase
Manhattan Bank for the date of determination;
o 1% over the sum of (a) the product of the secondary market
rate for the three month certificates of deposit and a
fraction of the percentage for determining the reserve
requirement for a depositary institution, and (b) the net
annual assessment rate payable on that date to the FDIC for
insuring deposits; and
o 0.5% over the weighted average of the rates on overnight
Federal Funds transactions with members of the Federal
Reserve System as arranged by Federal Funds brokers on the
date of determination.
The Eurodollar Base Rate is the per annum rate determined by the
administrative agent to the arithmetic mean of the offered rates for
deposits in dollars with a term comparable to the interest period that
appears on the Telerate British Bankers Association Interest Settlement
Rates Page. The Eurodollar rate is the Eurodollar Base Rate adjusted for
reserve requirements. On September 30, 1999, the borrowings under the
revolving credit agreement had a weighted average interest rate of 5.7%.
FEES. The revolving credit agreement requires us to pay the
following fees:
o a quarterly facility fee based on our leverage ratio;
o a fee to each lender based on our leverage ratio in
proportion to the lender's standby letter of credit
availability;
o an issuing fee of 0.125% per annum on the face amount of
each letter of credit; and
o an administrative fee to The Chase Manhattan Bank for its
services as administrative agent under the revolving credit
agreement.
COVENANTS AND CONDITIONS. In addition to specific customary
covenants, the revolving credit agreement includes covenants that restrict
our ability to:
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o dispose of assets;
o incur additional indebtedness;
o incur liens on property or assets;
o pay dividends;
o guarantee any obligations;
o enter into certain investments or transactions;
o repurchase or redeem capital stock;
o engage in mergers or consolidation;
o make acquisitions; and
o engage in certain transactions with subsidiaries and
affiliates and otherwise restrict corporate activities.
The revolving credit agreement contains financial covenants which
require CommScope NC to maintain:
o a Leverage Ratio equal to or below 3.25 to 1.0;
o an Interest Coverage Ratio equal to or above 4.25 to 1.0;
and
o Consolidated Net Worth of at least the sum of (a)
$100,000,000 and (b) 50% of the Consolidated Net Income of
CommScope, Inc., if positive, for each fiscal quarter
beginning July 1, 1997.
We were in compliance with these covenants at September 30, 1999.
GUARANTEES. Both CommScope, Inc. and our subsidiaries (other than
CommScope NC) with greater than $50 million book value, if any, have
unconditionally guaranteed the obligations under the revolving credit
agreement.
EVENTS OF DEFAULT. The revolving credit agreement contains
customary events of default, which include a default in the payment of
principal or interest on debt or guarantees aggregating $12.5 million or
more. If any event of default occurs, our obligations could be accelerated
with material adverse results to the holders of the notes.
AMENDMENTS. The revolving credit agreement was amended on
December 7, 1999 to permit the issuance of the notes.
EURO CREDIT AGREEMENT
On February 26, 1999, CommScope NC, our wholly owned subsidiary,
entered into a credit agreement (as amended, the "Euro credit agreement"),
which provides for a 15 million Euro ($16.4 million on the date of
borrowing) term credit facility that matures on March 1, 2006. The
borrowings under the Euro credit agreement will rank senior to, and will be
repaid prior to, any subordinated indebtedness, including the notes.
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INTEREST RATE CALCULATIONS. Interest is payable quarterly at a
per annum rate equal to the Euro LIBOR Market Rate plus an applicable
margin. The Euro LIBOR Market Rate is the per annum rate determined by the
administrative agent to the arithmetic mean of the offered rates for
deposits in dollars with a term comparable to the interest period that
appears on the Telerate British Bankers Association Interest Settlement
Rates Page adjusted for reserve requirements. On September 30, 1999 the
borrowings under the Euro credit agreement had a weighted average interest
rate of 4.53%.
FEES. The Euro credit agreement required us to pay a one time fee
of 0.125% of the amount of the loan.
COVENANTS AND CONDITIONS. The Euro credit agreement includes the
same covenants and conditions as the revolving credit agreement described
above. We were in compliance with these covenants at September 30, 1999.
GUARANTEES. Both CommScope, Inc. and our subsidiaries (other than
CommScope NC) with greater than $50 million book value, if any, have
unconditionally guaranteed the obligations under the Euro credit agreement.
EVENTS OF DEFAULT. The revolving credit agreement contains
customary events of default, which include a default in the payment of
principal or interest on debt or guarantees aggregating $12.5 million or
more. If any event of default occurs, our obligations could be accelerated
with material adverse results to the holders of the notes.
AMENDMENTS. The Euro credit agreement was amended on December 7,
1999 to permit the issuance of the notes.
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CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
The following is a summary of certain U.S. federal income tax
consequences and, in the case of Non-U.S. holders, as described below,
certain U.S. federal estate tax consequences, of the acquisition, ownership
and disposition of the notes and of the common stock into which the notes
may be converted by beneficial owners of the notes, but is not intended and
does not purport to be a complete analysis of all potential U.S. federal
income, estate tax, or other tax considerations which may be relevant to
certain investors in light of their particular investment or other
circumstances. In addition, we do not discuss any U.S. state or local
income or foreign income or other tax consequences. This summary is based
upon the provisions of the Internal Revenue Code of 1986, as amended,
Treasury Regulations and administrative and judicial interpretations
thereof, all as in effect as of the date of this prospectus and all of
which are subject to change or differing interpretation, possibly with
retroactive effect. The discussion below deals only with notes and common
stock held as capital assets which are, generally, property held for
investment, and does not address holders of notes or common stock that may
be subject to special rules, including, without limitation, certain U.S.
expatriates, financial institutions, insurance companies, tax-exempt
entities, dealers in securities or currencies, traders in securities that
elect mark-to-market accounting treatment, and persons who hold the notes
or common stock as part of a straddle, hedge, conversion or other
integrated transaction. You should consult your own tax advisor regarding
the particular U.S. federal, state and local and foreign income and other
tax consequences of acquiring, owning and disposing of the notes and common
stock that may be applicable to you.
Certain Federal Income Tax Consequences to U.S. Holders
For purposes of the following discussion, a "U.S. holder" means a
beneficial owner of a note or common stock that is, for U.S. federal income
tax purposes,
(1) a citizen or individual resident of the United States,
(2) a corporation or partnership (unless the Internal Revenue
Service provides otherwise) created or organized in or under the laws of
the United States or of any political subdivision thereof,
(3) an estate the income of which is subject to U.S. federal
income taxation regardless of its source, or
(4) a trust if, in general, the trust is subject to the
supervision of a court within the United States and the control of one or
more United States persons as described in section 7701(a)(30) of the
Internal Revenue Code.
TAXATION OF STATED INTEREST. In general, stated interest paid on
a note will be taxable to a U.S. holder as ordinary income at the time it
is received or accrued in accordance with the U.S. holder's regular method
of accounting for federal income tax purposes.
LIQUIDATED DAMAGES. As more fully described above under
"Descriptions of Notes -- Registration Rights; Liquidated Damages," in the
event a registration statement is not filed or does not become effective as
provided in the Registration Rights Agreement, we will be required to pay
liquidated damages to U.S. holders of the notes. Under the Treasury
Regulations regarding contingent payment debt instruments, any payment
subject to a remote or incidental contingency (i.e., there is a remote
likelihood that the payment will be required or the potential amount of the
payment is insignificant relative to the remaining payments on the debt
instrument) is not considered a contingent payment and is ignored for
purposes of computing original issue discount accruals. We believe that the
liquidated damage payments with respect to the notes are subject to either
a remote or incidental contingency. Accordingly, a U.S. holder of a note
should be required to report any liquidated damage payment as interest for
U.S. federal income tax purposes only at the time the payment is made or
properly accrued under the U.S. holder's method of accounting.
MARKET DISCOUNT. The resale of notes may be adversely affected by
the impact on a purchaser of the "market discount" provisions of the Code.
For this purpose, the market discount on a note generally will be equal
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to the amount, if any, by which the stated redemption price at maturity of
the note immediately after its acquisition (other than at original issue)
exceeds the U.S. holder's adjusted tax basis in the note. Subject to a de
minimis exception, these provisions generally require a U.S. holder who
acquires a note at a market discount to treat as ordinary income any gain
recognized on the disposition of that note to the extent of the "accrued
market discount" on such note at the time of disposition, unless the U.S.
holder elects to include accrued market discount in income currently. This
election to include market discount in income currently, once made, applies
to all market discount obligations acquired on or after the first taxable
year to which the election applies and may not be revoked without the
consent of the IRS. In general, market discount will be treated as accruing
on a straight-line basis over the remaining term of the note at the time of
acquisition, or, at the election of the U.S. holder, under a constant yield
method. A U.S. holder who acquires a note at a market discount and who does
not elect to include accrued market discount in income currently may be
required to defer the deduction of a portion of the interest on any
indebtedness incurred or maintained to purchase or carry the note until the
note is disposed of in a taxable transaction. If a U.S. holder acquires a
note with market discount and receives common stock upon conversion of the
note, the amount of accrued market discount not previously included in
income with respect to the converted note through the date of conversion
will be treated as ordinary income upon the disposition of the common
stock.
AMORTIZABLE BOND PREMIUM. If a U.S. holder of a note acquires the
note at a cost that is in excess of the amount payable at maturity (after
reducing that cost by an amount equal to the value of the conversion
option), the U.S. holder may elect under Section 171 of the Code to
amortize the excess cost (as an offset to interest income) on a constant
interest rate basis over the term of the note. However, because the notes
may be redeemed at our option at a price in excess of their principal
amount, a U.S. holder may be required to amortize any bond premium based on
the earlier call date and the call price payable at that time. If the U.S.
holder makes an election to amortize bond premium, the tax basis of all the
U.S. holder's notes will be reduced by the allowable bond premium
amortization. The amortization election would apply to all debt instruments
held or subsequently acquired by the electing purchaser and cannot be
revoked without permission from the IRS. On conversion of a note into
conversion shares, no additional amortization of any bond premium would be
allowed, and any remaining premium would be added to the U.S. holder's tax
basis in the common stock received.
DISPOSITIONS. Upon the sale, exchange or retirement of a note or
upon the sale of a share of common stock, a U.S. holder generally will
recognize taxable gain or loss in an amount equal to the difference, if
any, between the amount realized on the disposition (excluding any amount
received that is attributable to accrued but unpaid interest) and the U.S.
holder's adjusted tax basis in the note or common stock. A U.S. holder's
adjusted tax basis in a note will generally equal the cost of such note to
that holder, less principal payments received by that holder and increased
by any market discount previously included in income by that holder. A
holder's tax basis in the common stock received on conversion of a note
will be the same as the holder's adjusted tax basis in the note at the time
of the conversion, reduced by any basis allocable to a fractional share
paid in cash. Gain or loss recognized by a U.S. holder on the sale,
exchange or retirement of a note or upon the sale of a share of common
stock generally will be capital gain or loss and will be long-term capital
gain or loss if the note or common stock was held for more than one year.
Long-term capital gain recognized by a non-corporate U.S. holder generally
will be subject to a maximum tax rate of 20%. Subject to certain limited
exceptions, capital losses cannot be used to offset ordinary income.
CONVERSION OF THE NOTES. A U.S. holder generally will not
recognize any income, gain or loss upon conversion of a note into common
stock, except with respect to cash received in lieu of a fractional share
of common stock. The holder's tax basis in the common stock received on
conversion of a note will be the same as the holder's adjusted tax basis in
the note at the time of conversion (reduced by any basis allocable to a
fractional share), and the holding period for the common stock received on
conversion will generally include the holding period of the note converted.
Cash received in lieu of a fractional share of common stock upon
conversion should be treated as a payment in exchange for the fractional
share of common stock. Accordingly, the receipt of cash in lieu of a
fractional share of common stock generally should result in capital gain or
loss (measured by the difference between the cash received for the
fractional share and the U.S. holder's adjusted tax basis in the fractional
share).
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DISTRIBUTIONS ON THE COMMON STOCK. The amount of any distribution
by us in respect of the common stock (including any liquidated damages in
respect of common stock as described above under "Description of
Notes--Registration Rights; Liquidated Damages") will be equal to the
amount of cash and the fair market value, on the date of distribution, of
any property distributed. Generally, distributions will be treated as a
dividend, subject to a tax as ordinary income, to the extent of our current
or accumulated earnings and profits, then as a tax-free return of capital
to the extent of the holder's tax basis in the common stock and thereafter
as gain from the sale or exchange of the stock.
ADJUSTMENT OF CONVERSION PRICE. If at any time we make a
distribution of property to stockholders that would be taxable to those
stockholders as a dividend (e.g., distributions of evidences of
indebtedness or assets of our company, but generally not stock dividends or
rights to subscribe for common stock) for U.S. federal income tax purposes
and, in accordance with the antidilution provisions of the notes, the
conversion price of the notes is decreased, the amount of that decrease may
be deemed to be the payment of a taxable dividend to holders of the notes.
As a result, U.S. holders of notes could recognize taxable income as a
result of an event pursuant to which they receive no cash or property.
BACKUP WITHHOLDING AND INFORMATION REPORTING. We are required to
furnish to record holders of the notes, other than corporations and other
exempt holders, and to the IRS, information with respect to interest paid
on the notes and dividends paid on the common stock.
In general, "backup withholding" at a rate of 31% may apply to
payments of principal and interest made on a note, payments of dividends on
common stock, and to the payment of the proceeds of a sale or exchange of
common stock or of a note before maturity, that are made to a non-corporate
U.S. holder if such holder fails to provide a correct taxpayer
identification number or otherwise comply with applicable requirements of
the backup withholding rules. The backup withholding tax is not an
additional tax and may be credited against a U.S. holder's U.S. federal
income tax liability, provided that correct information is provided to the
Internal Revenue Service.
Certain U.S. Federal Income and Estate Tax Consequences to Non-U.S. Holders
For purposes of the following discussion, a "Non-U.S. holder" is
a beneficial owner of a note or common stock that is not, for U.S. federal
income tax purposes, a U.S. holder. An individual may, subject to certain
exceptions, be deemed to be a resident alien, as opposed to a non-resident
alien, by virtue of being present in the United States on at least 31 days
in the calendar year and for an aggregate of at least 183 days during a
three-year period ending in the current calendar year, counting for these
purposes all of the days present in the current year, one-third of the days
present in the immediately preceding year, and one-sixth of the days
present in the second preceding year. Resident aliens are subject to U.S.
federal tax as if they were U.S. citizens.
Under present U.S. federal income and estate tax law and subject to the
discussions below concerning income effectively connected with a trade or
business in the United States and backup withholding:
o payments of principal, premium, if any, and interest on a
note by us or any of our agents to any Non-U.S. holder will
not be subject to withholding of U.S. federal income tax,
provided that in the case of interest
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(1) the Non-U.S. holder does not directly or indirectly,
actually or constructively, own 10 percent or more of
the total combined voting power of all classes of our
stock entitled to vote,
(2) the Non-U.S. holder is not
(A) a controlled foreign corporation that is related
to us through sufficient stock ownership, or
(B) a bank receiving interest described in Section
881(c)(3)(A) of the Internal Revenue Code, and
(3) either
(A) the beneficial owner of the note certifies to us
or our paying agent, under penalties of perjury,
that it is not a "United States person", as
defined in the Internal Revenue Code and provides
its name, address, and U.S. Taxpayer
identification number, if any or
(B) a securities clearing organization, bank or other
financial institution that holds customers'
securities in the ordinary course of its trade or
business (a "financial institution") and holds the
note on behalf of the beneficial owner certifies
to us or our paying agent under penalties of
perjury that it, or the financial institution
between it and the beneficial owner, has received
from the beneficial owner the certificate
described in (A) above and provides us or our
paying agent with a copy of this certificate;
o payments of dividends on the common stock to a Non-U.S.
holder will be subject to withholding of U.S. federal income
tax at a 30% rate unless that rate is reduced by an
applicable income tax treaty. Dividends that are effectively
connected with the holder's conduct of a trade or business
in the U.S. are generally subject to U.S. federal income tax
at regular rates, but are not generally subject to the 30%
withholding tax if the Non-U.S. holder files a properly
executed Form W-8ECI or currently a Form 4224 or successor
form with the payor;
o a Non-U.S. holder will not be subject to U.S. federal income
tax on any gain or income realized on the sale or other
disposition of common stock, or the sale, exchange,
redemption, retirement at maturity or other disposition of a
note; provided that, in the case of proceeds representing
accrued interest, the conditions described in the first
bullet paragraph above are met, unless
(1) the Non-U.S. holder is an individual who is present in
the United States for 183 days or more during the
taxable year of gain and certain other conditions are
met, or
(2) the gain is effectively connected with the conduct of a
U.S. trade or business by such Non-U.S. holder, or if
an income tax treaty applies, is generally attributable
to a U.S. "permanent establishment" maintained by the
Non-U.S. holder;
o interest on notes not excluded from U.S. withholding tax as
described in the first bullet paragraph above will be
subject to U.S. withholding at a 30% rate, except where an
applicable tax treaty provides for the reduction or
elimination of such withholding tax;
o a note held by an individual who at the time of death is not
a citizen or resident of the United States will not be
subject to U.S. federal estate tax as a result of such
individual's death if, at the time of the individual's
death,
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(1) the individual did not directly or indirectly, actually
or constructively, own 10 percent or more of the total
combined voting power of all classes of our stock
entitled to vote, and
(2) the income on the note would not have been effectively
connected with the conduct of a trade or business by
the individual in the United States; and
o common stock owned or treated as owned by an individual who
at the time of death is not a citizen or resident of the
United States will be subject to U.S. federal estate tax
unless otherwise provided by an applicable estate tax
treaty.
If a Non-U.S. holder of a note is engaged in a trade or business
in the United States and interest on or gain realized on the sale of the
note is effectively connected with the conduct of such trade or business
or, if an income tax treaty applies, and the Non-U.S. holder maintains a
U.S. "permanent establishment" to which the interest or gain is generally
attributable, the Non-U.S. holder, although exempt from the withholding tax
discussed in the first bullet paragraph above, provided that such holder
furnishes a properly executed United States Internal Revenue Service Form
W-8ECI or currently a Form 4224 or successor form on or before any payment
date to claim such exemption, may be subject to U.S. federal income tax on
such interest, as well as on gain or income discussed in the third bullet
paragraph above, on a net basis in the same manner as if it were a U.S.
holder.
In addition, a foreign corporation that is a holder of a note or
common stock may be subject to a branch profits tax equal to 30% of its
effectively connected earnings and profits for the taxable year, subject to
some adjustments, unless it qualifies for a lower rate under an applicable
income tax treaty. For this purpose, interest on a note, dividends on
common stock or gain recognized on the disposition of a note or common
stock will be treated as effectively connected earnings and profits if that
interest, dividend or gain is effectively connected with the conduct by the
foreign corporation of a trade or business in the United States.
Treasury Regulations generally effective for payments made after
December 31, 2000 will provide alternative methods for satisfying the
certification requirement described in clause (3) of the first bullet
paragraph above and may also require a Non-U.S. holder claiming the benefit
of an income tax treaty to provide its U.S. taxpayer identification number.
These regulations generally also will require, in the case of a note or
common stock held by a foreign partnership, that
(1) in the case of interest, the certification described in
clause (3) of the first bullet paragraph above be
provided by the partners and in the case of dividends,
the partners certify entitlement to a reduced rate of
withholding under an applicable treaty and
(2) the partnership provide certain information, including
a U.S. taxpayer identification number.
A look-through rule will apply in the case of tiered
partnerships.
Under current Treasury Regulations, backup withholding at a rate
of 31% and information reporting will not apply to payments of interest or
dividends made by us or our paying agent, in its capacity as such, to a
Non-U.S. holder of a note or common stock if such holder has provided the
required certification as set forth above or has otherwise established an
exemption, provided that neither we nor our paying agent has actual
knowledge that the holder is a United States person or that the conditions
of any other exemption are not in fact satisfied. We or our paying agent
may, however, report payments of interest or dividends on the notes or
common stock. Payments of the proceeds from a disposition by a Non-U.S.
holder of a note or common stock made to or through a foreign office of a
broker will not be subject to information reporting or backup withholding,
except that information reporting may apply to such payments if the broker
is
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(1) a United States person,
(2) a controlled foreign corporation for U.S. federal
income tax purposes,
(3) a foreign person 50% or more of whose gross income is
effectively connected with a U.S. trade or business for
a specified three-year period, unless the Non-U.S.
holder is an exempt recipient or such broker has
evidence that the payee is a Non-U.S. holder and no
actual knowledge that such evidence is false and
certain other conditions are met, or
(4) with respect to payments made after December 31, 2000,
a foreign partnership, if at any time during its tax
year, one or more of its partners are U.S. persons, as
defined in Treasury Regulations, who in the aggregate
hold more than 50% of the income or capital interest in
the partnership or if, at any time during its tax year,
such foreign partnership is engaged in a U.S. trade or
business.
Payments of the proceeds from a disposition by a Non-U.S. holder
of a note or common stock made to or through the U.S. office of a broker is
subject to information reporting and backup withholding unless the holder
or beneficial owner certifies under penalties of perjury that he or she is
not a United States person and satisfies certain other conditions or
otherwise establishes an exemption from information reporting and backup
withholding.
Any amounts withheld under the backup withholding rules from a
payment to a Non-U.S. holder would be allowed as a refund or a credit
against such holder's U.S. federal income tax liability, provided the
required information is furnished to the Internal Revenue Service.
Non-U.S. holders should consult their tax advisors regarding U.S.
federal, state, local and foreign tax consequences to non-U.S. holders of
purchasing, holding and disposing of the notes or common stock.
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SELLING SECURITYHOLDERS
The notes were originally issued by us and sold by the initial
purchasers in a transaction exempt from the registration requirements of
the Securities Act to persons reasonably believed by the initial purchasers
to be qualified institutional buyers. Selling holders, including their
transferees, pledgees or donees or their successors, may from time to time
offer and sell pursuant to this prospectus any or all of the notes and
common stock into which the notes are convertible.
The following table sets forth information with respect to the
selling holders and the principal amounts of notes beneficially owned by
each selling holder that may be offered under this prospectus. The
information is based on information provided by or on behalf of the selling
holders. The selling holders may offer all, some or none of the notes or
common stock into which the notes are convertible. Because the selling
holders may offer all or some portion of the notes or the common stock, no
estimate can be given as to the amount of the notes or the common stock
that will be held by the selling holders upon termination of any sales. In
addition, the selling holders identified below may have sold, transferred
or otherwise disposed of all or a portion of their notes since the date on
which they provided the information regarding their notes in transactions
exempt from the registration requirements of the Securities Act.
COMMON COMMON
PRINCIPAL STOCK STOCK
AMOUNT OF ISSUABLE OWNED
NOTES UPON AFTER
BENEFICIALLY CONVERSION COMMON COMPLETION
OWNED AND OF THE STOCK OF THE
NAME OFFERED NOTES OFFERED OFFERING
------ ------------- -------------- ------------- -------------
None of the selling holders nor any of their affiliates,
officers, directors or principal equity holders has held any position or
office or has had any material relationship with us within the past three
years. The selling holders purchased all of the notes in private
transactions on or after December 15, 1999. All of the notes were
"restricted securities" under the Securities Act prior to this
registration.
Information concerning the selling holders may change from time
to time and any changed information will be set forth in supplements to
this prospectus if and when necessary. In addition, the conversion rate and
therefore, the number of shares of common stock issuable upon conversion of
the notes, is subject to adjustment under certain circumstances.
Accordingly, the aggregate principal amount of notes and the number of
shares of common stock into which the notes are convertible may increase or
decrease.
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PLAN OF DISTRIBUTION
The selling holders and their successors, including their
transferees, pledgees or donees or their successors, may sell the notes and
the common stock into which the notes are convertible directly to
purchasers or through underwriters, broker-dealers or agents, who may
receive compensation in the form of discounts, concessions or commissions
from the selling holders or the purchasers. These discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be
in excess of those customary in the types of transactions involved.
The notes and the common stock into which the notes are
convertible may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market prices, at varying prices determined at the time of sale,
or at negotiated prices. These sales may be effected in transactions, which
may involve crosses or block transactions:
o on any national securities exchange or U.S. inter-dealer
system of a registered national securities association on
which the notes or the common stock may be listed or quoted
at the time of sale;
o in the over-the-counter market;
o in transactions otherwise than on these exchanges or systems
or in the over-the-counter market;
o through the writing of options, whether the options are
listed on an options exchange or otherwise; or
o through the settlement of short sales.
In connection with the sale of the notes and the common stock
into which the notes are convertible or otherwise, the selling holders may
enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the notes or the
common stock into which the notes are convertible in the course of hedging
the positions they assume. The selling holders may also sell the notes or
the common stock into which the notes are convertible short and deliver
these securities to close out their short positions, or loan or pledge the
notes or the common stock into which the notes are convertible to
broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling holders from the sale of
the notes or common stock into which the notes are convertible offered by
them will be the purchase price of the notes or common stock less discounts
and commissions, if any. Each of the selling holders reserves the right to
accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of notes or common stock to be made
directly or through agents. We will not receive any of the proceeds from
this offering.
Our outstanding common stock is listed for trading on the New
York Stock Exchange. We do not intend to list the notes for trading on any
national securities exchange or on the New York Stock Exchange and can give
no assurance about the development of any trading market for the notes.
In order to comply with the securities laws of some states, if
applicable, the notes and common stock into which the notes are convertible
may be sold in these jurisdictions only through registered or licensed
brokers or dealers. In addition, in some states the notes and common stock
into which the notes are convertible may not be sold unless they have been
registered or qualified for sale or an exemption from registration or
qualification requirements is available and is complied with.
The selling holders and any underwriters, broker-dealers or
agents that participate in the sale of the notes and common stock into
which the notes are convertible may be "underwriters" within the meaning of
Section 2(11) of the Securities Act. Any discounts, commissions,
concessions or profit they earn on any resale of the shares may be
underwriting discounts and commissions under the Securities Act. Selling
holders who are "underwriters"
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within the meaning of Section 2(11) of the Securities Act will be subject
to the prospectus delivery requirements of the Securities Act. The selling
holders have acknowledged that they understand their obligations to comply
with the provisions of the Exchange Act and the rules thereunder relating
to stock manipulation, particularly Regulation M.
In addition, any securities covered by this prospectus that
qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act
may be sold under Rule 144 or Rule 144A rather than pursuant to this
prospectus. A selling holder may not sell any notes or common stock
described in this prospectus and may not transfer, devise or gift these
securities by other means not described in this prospectus.
To the extent required, the specific notes or common stock to be
sold, the names of the selling holders, the respective purchase prices and
public offering prices, the names of any agent, dealer or underwriter, and
any applicable commissions or discounts with respect to a particular offer
will be set forth in an accompanying prospectus supplement or, if
appropriate, a post-effective amendment to the registration statement of
which this prospectus is a part.
We entered into a registration rights agreement for the benefit
of holders of the notes to register their notes and common stock under
applicable federal and state securities laws under specific circumstances
and at specific times. The registration rights agreement provides for
cross-indemnification of the selling holders and us and their and our
respective directors, officers and controlling persons against specific
liabilities in connection with the offer and sale of the notes and the
common stock, including liabilities under the Securities Act. We will pay
substantially all of the expenses incurred by the selling holders incident
to the offering and sale of the notes and the common stock.
EXPERTS
The financial statements and schedules incorporated in this
prospectus by reference from the Company's Annual Report on Form 10-K for
the year ended December 31, 1998 have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is incorporated
herein by reference, and has been so incorporated in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
VALIDITY OF SECURITIES
The validity of the notes and the common stock which may be
offered by this prospectus is being passed upon for us by Fried, Frank,
Harris, Shriver & Jacobson, (a partnership including professional
corporations), New York, New York.
WHERE YOU CAN FIND MORE INFORMATION
Our principal executive offices are located at 1375 Lenoir-Rhyne
Boulevard, Hickory, North Carolina 28601 (telephone (828) 324-2200). We
also maintain an Internet home page at www.Commscope.com.
We have filed with the Securities and Exchange Commission a
registration statement on Form S-3 to register the securities offered by
this prospectus. However, this prospectus does not contain all of the
information contained in the registration statement and the exhibits and
schedules to the registration statement. We strongly encourage you to
carefully read the registration statement and the exhibits and schedules to
the registration statement. We also file annual, quarterly and special
reports, proxy statements and other information with the SEC.
You may inspect and copy such material at the public reference
facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the SEC's regional offices at 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade
Center, Suite 1300, New York, New York 10048. You may also obtain copies of
such material from the SEC at prescribed rates by writing to the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C.
20549.
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Please call the SEC at 1-800-SEC-0330 for further information on
the public reference rooms. Our SEC filings are also available to the
public from the SEC's web site at www.sec.gov.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information
contained in documents that we file with them, which means that we can
disclose important information to you by referring you to those documents.
The information incorporated by reference is considered to be part of this
prospectus. Information in this prospectus supersedes information
incorporated by reference that we filed with the SEC prior to the date of
this prospectus, while information that we file later with the SEC will
automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 (other than information filed in response to Items
402(k) and (l) of Regulation S-K):
1. Our Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, including all material incorporated by reference in that
report;
2. Our Current Reports on Form 8-K dated January 4, 1999,
December 7, 1999 and December 15, 1999;
3. Our Definitive Proxy Statement on Schedule 14A, filed on March
31, 1999, excluding the Sections captioned "Report of the Compensation
Committee" and "Performance Graph";
4. Our Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1999, June 30, 1999 and September 30, 1999, including all
material incorporated by reference in each of those reports;
5. All other reports filed by us pursuant to Section 13(a) or
15(d) of the Exchange Act since December 31, 1998, including all material
incorporated by reference in such reports; and
6. The description of the common stock contained in our
Registration Statement on Form 8-A, dated June 30, 1997, as amended.
You may request a copy of these filings, at no cost to you, by
writing or telephoning us at: CommScope, Inc.: Attention: Investor
Relations: 1375 Lenoir-Rhyne Boulevard, Hickory, North Carolina 28601
(telephone (828) 324-2200).
Our common stock is quoted on the NYSE under the symbol "CTV."
The last reported sales price of the common stock on the NYSE on January
13, 2000 was $40.875 per share. You may inspect reports and other
information concerning us at the offices of the NYSE, 20 Broad Street, New
York, New York 10004.
You should rely only on the information incorporated by reference
or provided in this prospectus. We have authorized no one to provide you
with different information. You should not assume that the information in
this prospectus is accurate as of any date other than the date on the front
of the document.
FORWARD-LOOKING STATEMENTS
Statements in this prospectus which are other than historical
facts are intended to be "forward-looking statements" within the meaning of
the Securities Exchange Act of 1934, the Private Securities Litigation
Reform Act of 1995 and other related laws. These forward-looking statements
are identified by their use of such terms and phrases as "intends,"
"intend," "intended," "goal," "estimate," "estimates," "expects," "expect,"
"expected," "project," "projects," "projected," "projections," "plans,"
"anticipates," "anticipated," "should," "designed to," "foreseeable
future," "believe," "believes" and "scheduled" and similar expressions.
These statements are subject to various risks and uncertainties, many of
which are outside of our control, such as the level of market demand for
our products, competitive pressures, the ability to achieve reductions in
costs and to continue to integrate acquisitions, price fluctuations of
materials and the potential unavailability thereof, foreign currency
fluctuations,
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technological obsolescence, international economic and political
uncertainties as well as the specific factors described above. The
information contained in this prospectus represents our best judgment at
the date of this prospectus based on information currently available.
However, we do not intend to update this information to reflect any
developments or information obtained after the date of this prospectus and
we disclaim any legal obligation to do so.
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================================ ==================================
We have not authorized any
dealer, salesperson or other
person to give you written
information other than this
prospectus or to make
representations as to matters
not stated in this prospectus.
You must not rely on
unauthorized information. This
prospectus is not an offer to
sell these securities or our
solicitation of your offer to
buy these securities in any
jurisdiction where that would
not be permitted or legal.
Neither the delivery of this
prospectus nor any sales made
hereunder after the date of this
prospectus shall create an
implication that the information
contained herein or our affairs
have not changed since the date
hereof.
COMMSCOPE, INC.
$172,500,000 of 4% Convertible
Subordinated Notes and 3,579,581
shares of Common Stock
Issuable upon Conversion of the Notes
----------------------------------
PROSPECTUS
----------------------------------
January , 2000
================================ ==================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized statement of expenses of the
Registrant in connection with the securities being registered. All of the
expenses are estimated, except for the registration fee.
Securities and Exchange Commission registration fee..... $ 45,540
Legal fees and expenses................................. $ 25,000
Accounting fees and expenses............................ $ 5,000
New York Stock Exchange Supplemental Listing fee........ $ 1,500
Miscellaneous........................................... $ 2,960
--------
Total............................................... $ 80,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides that a corporation may indemnify its directors and officers, as
well as other employees and individuals (each an "Indemnified Party," and
collectively, "Indemnified Parties"), against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement in
connection with specified actions, suits, or proceedings, whether civil,
criminal, administrative, or investigative, other than in connection with
actions by or in the right of the corporation (a "derivative action"), if
an Indemnified Party acted in good faith and in a manner such Indemnified
Party reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had
no reasonable cause to believe that his or her conduct was unlawful. A
similar standard is applicable in the case of derivative actions, except
that a corporation may only indemnify an Indemnified Party for expenses
(including attorneys' fees) incurred in connection with the defense or
settlement of such derivative action. Additionally, in the context of a
derivative action, DGCL Section 145 requires court approval before there
can be any indemnification where an Indemnified Party has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification arrangements that may be granted pursuant to a
corporation's charter, by-laws, disinterested director vote, stockholder
vote, agreement, or otherwise.
Section 102(b)(7) of the DGCL permits a corporation to provide in
its certificate of incorporation that a director of the corporation shall
not be personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability for (i) any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law,
(iii) any willful or negligent declaration of an unlawful dividend, stock
purchase or redemption, or (iv) any transaction from which the director
derived an improper personal benefit.
The Certificate of Incorporation and By-Laws of the Registrant
provide that directors and officers of the Registrant shall not, to the
fullest extent permitted by the DGCL, be liable to the Registrant or any of
its stockholders for monetary damages for any breach of fiduciary duty as a
director or officer, as the case may be. The Certificate of Incorporation
and By-Laws of the Registrant also provide that if the DGCL is amended to
permit further elimination or limitation of the personal liability of
directors and officers, then the liability of the directors and officers of
the Registrant shall be eliminated or limited to the fullest extent
permitted by the DGCL, as so amended.
The Registrant has entered into agreements to indemnify its
directors and officers in addition to the indemnification provided for in
its Certificate of Incorporation and By-Laws. These agreements, among other
things, indemnify the Registrant's directors and officers to the fullest
extent permitted by Delaware law for certain expenses (including attorney's
fees), liabilities, judgments, fines and settlement amounts incurred by
such person arising out of or in connection with such person's service as a
director or officer of the Registrant or an affiliate of the Registrant.
II - 1
<PAGE>
The Registrant maintains directors' and officers' liability
insurance, under which its directors and officers are insured, within the
limits and subject to the limitations of the policies, against certain
expenses in connection with the defense of, and certain liabilities which
might be imposed as a result of, actions, suits or proceedings to which
directors and officers are parties by reason of being or have been
directors or officers of the Registrant, as the case may be.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBITS
--------
3.1* Amended and Restated Certificate of Incorporation of
CommScope, Inc.
3.2* Amended and Restated By-Laws of CommScope, Inc.
4.1** Rights Agreement, dated June 12, 1997, between CommScope,
Inc. and ChaseMellon Shareholder Services, L.L.C.
4.2*** Amendment No. 1 to the Rights Agreement, dated as of June
14, 1999 between CommScope, Inc. and ChaseMellon Shareholder
Services, LLC.
4.4 Purchase Agreement dated December 9, 1999 between CommScope,
Inc. and the Initial Purchasers
4.5 Indenture, dated as of December 15, 1999 between CommScope
and First Union National Bank New York, as Trustee
4.6 Registration Rights Agreement, dated December 15, 1999
between CommScope and the Initial Purchasers.
4.7**** Specimen Stock Certificate.
5 Opinion of Fried, Frank, Harris, Shriver & Jacobson
12 Statements re: Computations of Ratios
23.1 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5.1)
23.2 Independent Auditors' Consent
24 Powers of Attorney (included on the signature page hereof)
25 Statement of Eligibility of the Trustee on Form T-1.
* Incorporated herein by reference from the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1997 (File No. 1-12929).
** Incorporated herein by reference from the Registration
Statement on Form 8-A filed June 30, 1997 (File No.
1-12929).
*** Incorporated herein by reference from the Amendment to the
Registration Statement on Form 8-A/A filed June 14, 1999
(File No. 1-12929).
**** Incorporated herein by reference from the Company's
Registration Statement on Form S-4 filed June 13, 1997 (Reg.
No. 333-23935).
II - 2
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price
represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement;
(iii) to include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) 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 foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a
II - 3
<PAGE>
director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding)
is asserted by such director, officer, or controlling person
in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II - 4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Hickory, State of North Carolina,
on January 14, 2000.
COMMSCOPE, INC.
By: /s/Frank M. Drendel
-----------------------------
Frank M. Drendel
Chairman and
Chief Executive Officer
Each of the undersigned hereby appoints Frank B. Wyatt, II and
Jearld L. Leonhardt. and each of them (with full power to act alone), as
attorney and agents for the undersigned, with full power of substitution,
for and in the name, place and stead of the undersigned, to sign and file
with the Commission under the Securities Act any and all amendments and
exhibits to this Registration Statement and any and all applications,
instruments and other documents to be filed with the Commission pertaining
to the registration of the securities covered hereby, with full power and
authority to do and perform any and all acts and things whatsoever
requisite or desirable.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
--------- ------------------------ ----
<S> <C> <C>
/s/Frank M. Drendel Chairman and January 14, 2000
------------------------- Chief Executive Officer
Frank M. Drendel (Principal Executive Officer)
/s/Jearld L. Leonhardt Executive Vice President January 14, 2000
------------------------- and Chief Financial Officer
Jearld L. Leonhardt (Principal Financial Officer)
/s/William R. Gooden Senior Vice President and Controller January 14, 2000
------------------------- (Principal Accounting Officer)
William R. Gooden
/s/Edward D. Breen Director January 14, 2000
-------------------------
Edward D. Breen
/s/Duncan M. Faircloth Director January 14, 2000
-------------------------
Duncan M. Faircloth
/s/Boyd L. George Director January 14, 2000
-------------------------
Boyd L. George
/s/George N. Hutton Director January 14, 2000
-------------------------
George N. Hutton, Jr.
/s/James N. Whitson Director January 14, 20000
-------------------------
James N. Whitson
</TABLE>
II - 5
<PAGE>
EXHIBIT INDEX
3.1* Amended and Restated Certificate of Incorporation of
CommScope, Inc.
3.2* Amended and Restated By-Laws of CommScope, Inc.
4.1** Rights Agreement, dated June 12, 1997, between CommScope,
Inc. and ChaseMellon Shareholder Services, L.L.C.
4.2*** Amendment No. 1 to the Rights Agreement, dated as of June
14, 1999 between CommScope, Inc. and ChaseMellon Shareholder
Services, LLC.
4.4 Purchase Agreement dated December 9, 1999 between CommScope,
Inc. and the Initial Purchasers
4.5 Indenture, dated as of December 15, 1999 between CommScope
and First Union National Bank New York, as Trustee
4.6 Registration Rights Agreement, dated December 15, 1999
between CommScope and the Initial Purchasers.
4.7**** Specimen Stock Certificate.
5 Opinion of Fried, Frank, Harris, Shriver & Jacobson
12 Statements re: Computations of Ratios
23.1 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5.1)
23.2 Independent Auditors' Consent
24 Powers of Attorney (included on the signature page hereof)
25 Statement of Eligibility of the Trustee on Form T-1.
* Incorporated herein by reference from the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1997 (File No. 1-12929).
** Incorporated herein by reference from the Registration
Statement on Form 8-A filed June 30, 1997 (File No.
1-12929).
*** Incorporated herein by reference from the Amendment to the
Registration Statement on Form 8-A/A filed June 14, 1999
(File No. 1-12929).
**** Incorporated herein by reference from the Company's
Registration Statement on Form S-4 filed June 13, 1997 (Reg.
No. 333-23935).
Exhibit 4.4
===========================================================================
COMMSCOPE, INC.
$150,000,000
Convertible Subordinated Notes due 2006
PURCHASE AGREEMENT
------------------
Dated: December 9, 1999
===========================================================================
<PAGE>
COMMSCOPE, INC.
$150,000,000
CONVERTIBLE SUBORDINATED NOTES DUE 2006
PURCHASE AGREEMENT
------------------
December 9,1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CIBC WORLD MARKETS CORP.
as Representatives of the several Initial Purchasers
c/o MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1305
Ladies and Gentlemen:
CommScope, Inc. (the "Company"), a Delaware corporation, confirms
its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and each of the other Initial
Purchasers named in Schedule A hereto (collectively, the "Initial
Purchasers", which term shall also include any initial purchaser
substituted as hereinafter provided in Section 11 hereof), for whom Merrill
Lynch and CIBC World Markets Corp. are acting as representatives (in such
capacity, the "Representatives"), with respect to the issue and sale by the
Company and the purchase by the Initial Purchasers, acting severally and
not jointly, of the respective principal amounts set forth in said Schedule
A of $150,000,000 aggregate principal amount of the Company's Convertible
Subordinated Notes due 2006 (the "Firm Notes"), and, at the election of the
Initial Purchasers, solely to cover over-allotments, if any, in connection
with the offering of the Firm Notes, up to $22,500,000 aggregate principal
amount of additional Convertible Subordinated Notes due 2006 (the
"Additional Notes"). The Firm Notes and any Additional Notes that the
Initial Purchasers elect to purchase are collectively referred to as the
"Notes." The Notes will be convertible at the option of the holder thereof
into
2
<PAGE>
shares (the "Conversion Shares") of common stock, par value $.01 per
share, of the Company (the "Common Stock"). The Notes are to be issued
pursuant to an indenture to be dated as of the Closing Time (as defined in
Section 2(b)) (the "Indenture") between the Company and First Union
National Bank, as trustee (the "Trustee"). Notes issued in book-entry form
will be issued to Cede & Co. as nominee of The Depository Trust Company
("DTC") pursuant to a letter agreement, to be dated as of the Closing Time
(the "DTC Agreement"), among the Company, the Trustee and DTC.
The Notes and the Conversion Shares are collectively referred to
herein as the "Securities." Capitalized terms used herein without
definition have the respective meanings specified in the Offering
Memorandum.
The Company understands that the Initial Purchasers propose to
make an offering of the Securities on the terms and in the manner set forth
herein and agrees that the Initial Purchasers may resell, subject to the
conditions set forth herein, all or a portion of the Securities to
purchasers ("Subsequent Purchasers") at any time after this Agreement has
been executed and delivered. The Securities are to be offered and sold
through the Initial Purchasers without being registered under the
Securities Act of 1933, as amended (the "1933 Act"), in reliance upon
exemptions therefrom. Pursuant to the terms of the Securities and the
Indenture, investors that acquire Securities may only resell or otherwise
transfer such Securities if such Securities are hereafter registered under
the 1933 Act or if an exemption from the registration requirements of the
1933 Act is available (including the exemption afforded by Rule 144A ("Rule
144A") of the rules and regulations promulgated under the 1933 Act by the
Securities and Exchange Commission (the "Commission")).
The Company has prepared and delivered to each Initial Purchaser
copies of a preliminary offering memorandum dated December 6, 1999 (the
"Preliminary Offering Memorandum") and has prepared and will deliver to
each Initial Purchaser, on the date hereof or the next succeeding day,
copies of a final offering memorandum dated December 9, 1999 (the "Final
Offering Memorandum"), each for use by such Initial Purchaser in connection
with its solicitation of purchases of, or offering of, the Securities.
"Offering Memorandum" means, with respect to any date or time referred to
in this Agreement, the most recent offering memorandum (whether the
Preliminary Offering Memorandum or the Final Offering Memorandum, or any
amendment or supplement to either such document), including exhibits
thereto and any documents incorporated therein by reference, which has been
prepared and delivered by the Company to the Initial Purchasers in
connection with their solicitation of purchases of, or offering of, the
Securities.
The Initial Purchasers and other holders of Securities (including
subsequent transferees) will be entitled to the benefits of the
registration rights agreement, to be dated as of the Closing Time (the
"Registration Rights Agreement"), among the Company and the Initial
Purchasers, in the form attached as Exhibit B. Pursuant to the Registration
Rights Agreement, the Company will agree to file with the Commission a
shelf registration statement pursuant to
3
<PAGE>
Rule 415 under the 1933 Act relating to resales of the Securities by
holders thereof, and to use its best efforts to cause such shelf
registration statement to be declared effective.
SECTION 1. Representations and Warranties by the Company.
----------------------------------------------
(a) Representations and Warranties. The Company represents and
warrants to each Initial Purchaser as of the date hereof and as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b), and agrees with each Initial
Purchaser, as follows:
(i) Offering Memorandum. The Offering Memorandum does not, and at
the Closing Time (and, if any Additional Notes are purchased, at the
Date of Delivery), will 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; provided that this representation, warranty
and agreement shall not apply to statements in or omissions from the
Offering Memorandum made in reliance upon and in conformity with
information furnished to the Company in writing by any Initial
Purchaser through Merrill Lynch expressly for use in the Offering
Memorandum.
(ii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Offering
Memorandum are independent public accountants with respect to the
Company and its subsidiaries within the meaning of Regulation S-X
under the 1933 Act.
(iii) Financial Statements. The financial statements, together
with the related schedules and notes, included in the Offering
Memorandum present fairly the financial position of the Company and
its consolidated subsidiaries at the dates indicated and the statement
of operations, stockholders= equity and cash flows of the Company and
its consolidated subsidiaries for the periods specified; said
financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules, if any,
included in the Offering Memorandum present fairly in accordance with
GAAP the information required to be stated therein. The selected
financial data and the summary financial information included in the
Offering Memorandum present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements included in the Offering Memorandum.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Offering Memorandum,
neither the Company nor any of its subsidiaries has sustained 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,
except as
4
<PAGE>
otherwise set forth or contemplated in the Offering Memorandum; and
since the respective dates as of which information is given in the
Offering Memorandum, there has not been any change in the capital
stock or any increase in the long-term debt of the Company or any of
its subsidiaries, other than the issuance of shares of common stock as
a result of exercises of stock options under existing Company stock
option plans, or any material adverse change, or any development that
may be reasonably expected to involve 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, except as otherwise set forth or contemplated in
the Offering Memorandum.
(v) Good Standing of the Company. The Company is a corporation
duly organized, validly existing and 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 Memorandum; and the Company is duly qualified to transact
business as a foreign corporation and is in good standing in each
other jurisdiction in which it owns or leases properties or conducts
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.
(vi) Good Standing of Subsidiaries. Each "significant subsidiary"
of the Company (as such term is defined in Rule 1-02 of Regulation
S-X) (each a "Subsidiary" and, collectively, the "Subsidiaries") has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Offering Memorandum
and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
material adverse effect on the consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole; except as otherwise disclosed in the
Offering Memorandum, all of the issued and outstanding capital stock
of each such Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and is owned by the Company, directly
or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of
such Subsidiary. The only Subsidiaries of the Company are the
subsidiaries listed on Schedule C hereto.
(vii) Capitalization. The Company has an authorized
capitalization as set forth in the Offering Memorandum in the column
entitled "Actual" under the caption "Capitalization", and all of the
issued shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable; and
none of the
5
<PAGE>
outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any
securityholder of the Company.
(viii) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(ix) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and, when executed and delivered by the
Company and the Trustee, will constitute a valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors= rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law).
(x) Authorization of the Notes. The Notes have been duly
authorized and, at the Closing Time, will have been duly executed by
the Company and, when authenticated, issued and delivered in the
manner provided for in the Indenture and delivered against payment of
the purchase price therefor as provided in this Agreement, will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers) reorganization, moratorium or similar laws affecting
enforcement of creditors= rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at
law), and will be in the form contemplated by, and entitled to the
benefits of, the Indenture.
(xi) Authorization of Registration Rights Agreement. As of the
Closing Time, the Registration Rights Agreement will have been duly
authorized, executed and delivered by the Company and upon such
execution by the Company (assuming the due authorization, execution
and delivery thereof by the other parties thereto) the Registration
Rights Agreement will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with the
terms thereof, except as enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), and except as any rights to indemnity
and contribution may be limited by federal and state securities laws
and public policy considerations.
6
<PAGE>
(xii) Conversion Shares. The Conversion Shares have been duly
authorized and validly reserved for issuance upon conversion of the
Notes by all necessary corporate action of the Company and, when duly
issued by the Company upon such conversion, will be validly issued,
fully paid and nonassessable; no holder thereof will be subject to
personal liability for obligations of the Company solely by reason of
being such a holder; and the issuance of the Conversion Shares will
not be subject to preemptive or similar rights.
(xiii) Description of the Securities and the Indenture. The
Securities and the Indenture will conform in all material respects to
the respective statements relating thereto contained in the Offering
Memorandum and will be in substantially the respective forms last
delivered to the Initial Purchasers prior to the date of this
Agreement.
(xiv) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries is in violation of its respective charter or
by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which or any of
them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject (collectively,
"Agreements and Instruments") except for such defaults that would not
result in a material adverse effect on the consolidated financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries taken as a whole (a "Material Adverse Effect");
and the execution, delivery and performance of this Agreement, the
Indenture, the Registration Rights Agreement and the Notes and any
other agreement or instrument entered into or issued or to be entered
into or issued by the Company in connection with the transactions
contemplated hereby or thereby or in the Offering Memorandum and the
consummation of the transactions contemplated herein and in the
Offering Memorandum (including the issuance and sale of the Securities
and the use of the proceeds from the sale of the Securities as
described in the Offering Memorandum under the caption "Use of
Proceeds") and compliance by the Company with its obligations
hereunder have been duly authorized by all necessary corporate action
and do not and 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 Agreements and Instruments which conflict, breach,
violation or default would have, or may reasonably be expected to
have, a Material Adverse Effect, 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.
(xv) Absence of Proceedings. Other than as set forth or
contemplated in the Offering Memorandum, 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 Com-
7
<PAGE>
pany or any of its subsidiaries is the subject which would
individually or in the aggregate have, or may reasonably be expected
to have, a Material Adverse Effect; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(xvi) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or own or possess adequate licenses or
other rights to use, all patents and trademarks used in connection
with the businesses conducted by them as described in the Offering
Memorandum, other than such patents, trademarks or licenses with
respect to which the failure to own or possess, or to own or possess
adequate licenses or other rights to use in connection with the
businesses conducted by the Company and its subsidiaries as described
in the Offering Memorandum, individually or considered together with
all other such failures, may not reasonably be expected to have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict
with (and knows of no such infringement of or conflict with) asserted
rights of others with respect to any such patents, trademarks or
licenses of the Company, which infringement or conflict, individually
or considered together with all other such infringements and
conflicts, would have, or may reasonably be expected to have, a
Material Adverse Effect.
(xvii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance
or sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement or for the due execution,
delivery or performance of the Indenture and the Registration Rights
Agreement by the Company, except such as have been already obtained
and such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Notes or
by the federal and state securities laws in connection with the
registration obligations under the Registration Rights Agreement.
(xviii) Title to Property. 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 Memorandum or such as do not
materially affect the value of such property and do not interfere in
any material respect with the use made and proposed to be made of such
property by the Company and its subsidiaries; and any real property
and buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere in any material
respect with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
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(xix) Environmental Laws. Except as described in the Offering
Memorandum and except such matters as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the
Company nor any of its subsidiaries is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of
chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively,
"Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company and its subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws and are
each in compliance with their requirements, (C) there are no pending
or threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental
Law against the Company or any of its subsidiaries and (D) there are
no events or circumstances that might reasonably be expected to form
the basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party or governmental body or agency,
against or affecting the Company or any of its subsidiaries relating
to Hazardous Materials or Environmental Laws.
(xx) Year 2000. The Company has reviewed its operations to
evaluate the extent to which the business or operations of the Company
will be affected by the Year 2000 Problem (that is, any significant
risk that computer hardware or software applications used by the
Company 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); as a result
of such review, the Company has no reasonable belief that there are
any issues related to the Company's preparedness to address the Year
2000 Problem that are of a character required to be described or
referred to in the Offering Memorandum which have not been accurately
described in the Offering Memorandum and which could reasonably be
expected to have a Material Adverse Effect.
(xxi) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
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(xxii) Similar Offerings. Neither the Company nor any of its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
(each, an "Affiliate"), has, directly or indirectly, solicited any
offer to buy, sold or offered to sell or otherwise negotiated in
respect of, or will solicit any offer to buy, sell or offer to sell or
otherwise negotiate in respect of, in the United States or to any
United States citizen or resident, any security which is or would be
integrated with the sale of the Securities in a manner that would
require the Securities to be registered under the 1933 Act.
(xxiii) Rule 144A Eligibility. The Notes are eligible for resale
pursuant to Rule 144A and will not be, at the Closing Time, of the
same class as securities listed on a national securities exchange
registered under Section 6 of the Securities Exchange Act of 1934 (the
"1934 Act"), or quoted in a U.S. automated interdealer quotation
system.
(xxiv) No General Solicitation. None of the Company, its
Affiliates or any person acting on its or any of their behalf (other
than the Initial Purchasers, as to whom the Company makes no
representation) has engaged or will engage, in connection with the
offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the 1933
Act.
(xxv) No Registration Required. Subject to the accuracy of the
representations and warranties of the Initial Purchasers set forth in
Section 6(c) and compliance by the Initial Purchasers with the
procedures set forth in Section 6(a) hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the
Initial Purchasers and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to register
the Securities under the 1933 Act or to qualify the Indenture under
the Trust Indenture Act of 1939, as amended (the "1939 Act").
(xxvi) Reporting Company. The Company is subject to the reporting
requirements of Section 13 or Section 15(d) of the 1934 Act.
(b) Any certificate signed by any officer of the Company and
delivered to the Initial Purchasers or to counsel for the Initial
Purchasers shall be deemed a representation and warranty by the Company to
the Initial Purchasers as to the matters covered thereby.
SECTION 2. Sale and Delivery to the Initial Purchasers; Closing.
-----------------------------------------------------
(a) Securities. On the basis of the representations and
warranties herein contained, and subject to the terms and conditions herein
set forth, the Company agrees to sell to each Initial Purchaser, severally
and not jointly, and each Initial Purchaser, severally and not jointly,
agrees to purchase from the Company, at the price set forth in Schedule B,
the aggregate principal amount of Firm Notes set forth in Schedule A
opposite the name of such Initial Purchaser, plus any additional principal
amount of Firm Notes which such Initial Purchaser may become obligated to
purchase pursuant to the provisions of Section 11 hereof.
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(b) Additional Notes. In addition, on the basis of the
representations and warranties herein contained, and subject to the terms
and conditions herein set forth, the Company hereby grants an option to the
Initial Purchasers, severally and not jointly, to purchase up to aggregate
principal amount of $22,500,000 of Additional Notes, at the price set forth
in Schedule B. The option hereby granted will expire 30 days after the date
hereof and may be exercised in whole or in part from time to time only for
the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Firm Notes upon notice by the
Representatives to the Company setting forth the number of Additional Notes
as to which the several Initial Purchasers are then exercising the option
and the time and date of payment and delivery for such Additional Notes.
Any such time and date of delivery (a "Date of Delivery") shall be
determined by the Representatives but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to
the Closing Time (as defined below). If the option is exercised as to all
or any portion of the Additional Notes, each of the Initial Purchasers,
acting severally and not jointly, will purchase that proportion of the
total number of Additional Notes then being purchased which the number of
Firm Notes set forth in Schedule A opposite the name of such Initial
Purchaser bears to the total number of Firm Notes, subject in each case to
such adjustments as the Representatives in their discretion shall make to
eliminate any sales or purchases of Notes in denominations in an aggregate
principal amount of less than $1,000.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the office of Skadden,
Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York
10022, or at such other place as shall be agreed upon by the
Representatives and the Company, at 9:00 A.M. (eastern time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (eastern time)) business day
after the date hereof (unless postponed in accordance with the provisions
of Section 11), or such other time not later than ten business days after
such date as shall be agreed upon by the Representatives and the Company
(such time and date of payment and delivery being herein called the
"Closing Time").
In addition, in the event that any or all of the Additional Notes
are purchased by the Initial Purchasers, payment of the purchase price for,
and delivery of certificates for, such Additional Notes shall be made at
the above-mentioned offices, or at such other place as shall be agreed upon
by the Company and the Representatives, on each Date of Delivery as
specified in the notice from the Representatives to the Company.
Payment shall be made to the Company by wire transfer of
immediately available funds to a bank account designated by the Company,
against delivery to the Representatives for the respective accounts of the
Initial Purchasers of certificates for the Notes to be purchased by them.
It is understood that each Initial Purchaser has authorized the
Representatives, for its account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Notes which it has agreed to
purchase. Merrill Lynch, individually and not as representative of the
Initial Purchasers, may (but shall not be obligated to) make payment of the
purchase price for the
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Notes to be purchased by any Initial Purchaser whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case
may be, but such payment shall not relieve such Initial Purchaser from its
obligations hereunder.
(d) Denominations; Registration. Certificates for the Notes shall
be in such denominations and registered in such names as the
Representatives may request in writing at least one full business day
before the Closing Time or the relevant Date of Delivery, as the case may
be. The certificates representing the Notes shall be made available for
examination and packaging by the Initial Purchasers in The City of New York
not later than 10:00 A.M. on the last business day prior to the Closing
Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with
each Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible,
will furnish to each Initial Purchaser, without charge, such number of
copies of the Preliminary Offering Memorandum, the Final Offering
Memorandum and any amendments and supplements thereto and documents
incorporated by reference therein as such Initial Purchaser may reasonably
request.
(b) Notice and Effect of Material Events. The Company will
immediately notify each Initial Purchaser, and confirm such notice in
writing, of (x) any filing made by the Company of information relating to
the offering of the Securities with any securities exchange or any other
regulatory body in the United States or any other jurisdiction, and (y)
prior to the completion of the placement of the Securities by the Initial
Purchasers as evidenced by a notice in writing from the Initial Purchasers
to the Company, any material changes in or affecting the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise
which (i) make any statement in the Offering Memorandum false or misleading
or (ii) are not disclosed in the Offering Memorandum. In such event or if
during such time any event shall occur as a result of which it is
necessary, in the reasonable opinion of any of the Company, its counsel,
the Initial Purchasers or counsel for the Initial Purchasers, to amend or
supplement the Final Offering Memorandum in order that the Final Offering
Memorandum not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances then existing, the Company
will forthwith amend or supplement the Final Offering Memorandum by
preparing and furnishing to each Initial Purchaser an amendment or
amendments of, or a supplement or supplements to, the Final Offering
Memorandum (in form and substance satisfactory in the reasonable opinion of
counsel for the Initial Purchasers) so that, as so amended or supplemented,
the Final Offering Memorandum will 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 existing at the
time it is delivered to a Subsequent Purchaser, not misleading.
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(c) Amendment to Offering Memorandum and Supplements. The Company
will advise each Initial Purchaser promptly of any proposal to amend or
supplement the Offering Memorandum and will not effect such amendment or
supplement without the consent of the Initial Purchasers. Neither the
consent of the Initial Purchasers, nor the Initial Purchaser=s delivery of
any such amendment or supplement, shall constitute a waiver of any of the
conditions set forth in Section 5 hereof.
(d) Rating of Securities. The Company shall take all reasonable
action necessary to enable Standard & Poor's Ratings Services, a division
of McGraw Hill, Inc. ("S&P"), and Moody's Investors Service Inc.
("Moody's") to provide their respective credit ratings of the Securities.
(e) DTC. The Company will cooperate with the Representatives and
use its best efforts to permit the Securities to be eligible for clearance
and settlement through the facilities of DTC.
(f) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in
the Offering Memorandum under "Use of Proceeds".
(g) Restriction on Sale of Securities. During a period of 90 days
from the date of the Offering Memorandum, the Company will not, without the
prior written consent of Merrill Lynch, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
to purchase, lend or otherwise transfer or dispose of any Common Stock or
any securities convertible into or exercisable or exchangeable for Common
Stock or file any registration statement under the 1933 Act with respect to
any of the foregoing or (ii) enter into any swap or any other agreement or
any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii) above
is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. Notwithstanding the foregoing, during such period (i)
the Company may grant stock options pursuant to the Company's existing
stock option plan and (ii) the Company may issue shares of Common Stock
upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof.
(h) PORTAL Designation. The Company will use its best efforts to
permit the Securities to be designated PORTAL securities in accordance with
the rules and regulations adopted by the National Association of Securities
Dealers, Inc. ("NASD") relating to trading in the PORTAL Market.
SECTION 4. Payment of Expenses.
--------------------
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(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing, delivery to the Initial Purchasers and any filing of
the Offering Memorandum (including financial statements and any schedules
or exhibits and any document incorporated therein by reference) and of each
amendment or supplement thereto, (ii) the preparation, printing and
delivery to the Initial Purchasers of this Agreement, any Agreement among
Initial Purchasers, the Indenture and such other documents as may be
required in connection with the offering, purchase, sale, issuance or
delivery of the Securities, (iii) the preparation, issuance and delivery of
the certificates for the Securities to the Initial Purchasers, including
any transfer taxes, any stamp or other duties payable upon the sale,
issuance and delivery of the Securities to the Initial Purchasers and any
charges of DTC in connection therewith, (iv) the fees and disbursements of
the Company=s counsel, accountants and other advisors, (v) the reasonable
fees and disbursements of counsel for the Initial Purchasers in connection
with the preparation of the Blue Sky Survey, any supplement thereto, (vi)
the fees and expenses of the Trustee, including the fees and disbursements
of counsel for the Trustee in connection with the Indenture and the
Securities, (vii) any fees payable in connection with the rating of the
Securities, and (viii) any fees and expenses payable in connection with the
initial and continued designation of the Securities as PORTAL securities
under the PORTAL Market Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by
the Representatives in accordance with the provisions of Section 5 or
Section 10(a)(i) hereof, the Company shall reimburse the Initial Purchasers
for all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations. The
obligations of the several Initial Purchasers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any of
its subsidiaries delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations
hereunder, and to the following further conditions:
(a) Opinion of Counsel for Company. At the Closing Time, the
Representatives shall have received the favorable opinion, dated as of the
Closing Time, of Fried, Frank, Harris, Shriver & Jacobson, counsel for the
Company, in form and substance satisfactory to counsel for the Initial
Purchasers, together with signed or reproduced copies of such letter for
each of the other Initial Purchasers to the effect set forth in Exhibit A-1
hereto and to such further effect as counsel to the Initial Purchasers may
reasonably request.
(b) Opinion of General Counsel of Company. At the Closing Time,
the Representatives shall have received the favorable opinion, dated as of
the Closing Time, of Frank B. Wyatt, II, Vice President and General Counsel
of the Company, in form and substance satisfactory to counsel for the
Initial Purchasers, together with signed or reproduced copies of
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<PAGE>
such letter for each of the other Initial Purchasers to the effect set
forth in Exhibit A-2 hereto and to such further effect as counsel to the
Initial Purchasers may reasonably request.
(c) Opinion of Counsel for Initial Purchasers. At the Closing
Time, the Representatives shall have received the favorable opinion, dated
as of the Closing Time, of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel for the Initial Purchasers, together with signed or reproduced
copies of such letter for each of the other Initial Purchasers in form and
substance satisfactory to the Representatives. Such counsel may also state
that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.
(d) Officers' Certificate. At the Closing Time, there shall not
have been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any Material Adverse
Effect, and the Representatives shall have received a certificate of the
President or a Vice President of the Company and of the chief financial or
chief accounting officer of the Company, dated as of the Closing Time, to
the effect that (i) there has been no such Material Adverse Effect, (ii)
the representations and warranties in Section 1 hereof are true and correct
with the same force and effect as though expressly made at and as of the
Closing Time, and (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to the Closing Time.
(e) Accountants' Comfort Letter. At the time of the execution of
this Agreement, the Representatives shall have received from Deloitte &
Touche LLP a letter dated such date, in form and substance satisfactory to
the Representatives, together with signed or reproduced copies of such
letter for each of the other Initial Purchasers containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to Initial Purchasers with respect to the financial statements and
certain financial information contained in the Offering Memorandum.
(f) Bring-down Comfort Letter. At the Closing Time, the
Representatives shall have received from Deloitte & Touche LLP a letter,
dated as of the Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (e) of this
Section, except that the specified date referred to shall be a date not
more than three business days prior to the Closing Time.
(g) Maintenance of Rating. At the Closing Time and on any Date of
Delivery, the Notes shall be rated at least Baa3 by Moody=s and BB+ by S&P,
and the Company shall have delivered to the Representatives a letter dated
the Closing Time or such Date of Delivery, as applicable, from each such
rating agency, or other evidence satisfactory to the Representatives,
confirming that the Notes have such ratings; and since the date of this
Agreement, there shall not have occurred a downgrading in the rating
assigned to the Notes or any of the Company's other debt securities by any
"nationally recognized statistical rating agency", as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and
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no such securities rating agency shall have publicly announced that it has
under surveillance or review, with possible negative implications, its
rating of the Notes or any of the Company=s other debt securities.
(h) PORTAL. At the Closing Time, the Securities shall have been
designated for trading on PORTAL.
(i) Conditions to Purchase of Additional Notes. In the event that
the Initial Purchasers exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the Additional Notes, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company or any subsidiary
of the Company hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Representatives shall
have received:
(i) Officers' Certificate. A certificate, dated such Date of Delivery,
of the President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section 5(d) hereof
remains true and correct as of such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of each of
Fried, Frank, Harris, Shriver & Jacobson, counsel for the Company, and
Frank B. Wyatt, II, Vice President and General Counsel of the Company, in
form and substance satisfactory to counsel for the Initial Purchasers,
dated such Date of Delivery, relating to the Additional Notes to be
purchased on such Date of Delivery and otherwise to the same effect as the
opinions required by Section 5(a) and 5 (b) hereof, respectively.
(iii) Opinion of Counsel for Initial Purchasers. The favorable opinion
of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Initial
Purchasers, dated such Date of Delivery, relating to the Additional Notes
to be purchased on such Date of Delivery and otherwise to the same effect
as the opinion required by Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from Deloitte & Touche LLP,
in form and substance satisfactory to the Representatives and dated such
Date of Delivery, substantially in the same form and substance as the
letter furnished to the Representatives pursuant to Section 5(f) hereof,
except that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to such Date of
Delivery.
(j) Additional Documents. At the Closing Time and at each Date of
Delivery, counsel for the Initial Purchasers shall have been furnished with
such documents and opinions as they may reasonably require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein
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contained; and all proceedings taken by the Company in connection with the
issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the Representatives and counsel for
the Initial Purchasers.
(k) Registration Rights Agreement. At the Closing Time, the
Company and the Initial Purchasers shall have entered into the Registration
Rights Agreement, and the Registration Rights Agreement shall be in full
force and effect.
(l) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of
Additional Notes on a Date of Delivery which is after the Closing Time, the
obligations of the several Initial Purchasers to purchase the relevant
Additional Notes, may be terminated by the Representatives by notice to the
Company at any time at or prior to Closing Time or such Date of Delivery,
as the case may be, and such termination shall be without liability of any
party to any other party except as provided in Section 4 and except that
Sections 1, 7, 8 and 9 shall survive any such termination and remain in
full force and effect.
SECTION 6. Subsequent Offers and Resales of the Securities.
------------------------------------------------
(a) Offer and Sale Procedures. Each of the Initial Purchasers and
the Company hereby establish and agree to observe the following procedures
in connection with the offer and sale of the Securities:
(i) Offers and Sales only to Qualified Institutional Buyers. Offers
and sales of the Securities shall only be made to persons whom the offeror
or seller reasonably believes to be qualified institutional buyers, as
defined in Rule 144A under the 1933 Act ("Qualified Institutional Buyers").
(ii) No General Solicitation. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 1933 Act) will be
used in the United States in connection with the offering or sale of the
Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
Subsequent Purchaser of a Security acting as a fiduciary for one or more
third parties, in connection with an offer and sale to such purchaser
pursuant to clause (i) above, each third party shall, in the judgment of
the applicable Initial Purchaser, be a Qualified Institutional Buyer.
(iv) Subsequent Purchaser Notification. Each Initial Purchaser will
take reasonable steps to inform, and cause each of its U.S. Affiliates to
take reasonable steps to inform, persons acquiring Securities from such
Initial Purchaser or affiliate, as the case may be, in the United States
that the Securities (A) have not been and will not be registered under the
1933 Act, (B) are being sold to them without registration under the
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1933 Act in reliance on Rule 144A or in accordance with another exemption
from registration under the 1933 Act, as the case may be, and (C) may not
be offered, sold or otherwise transferred except (1) to the Company, (2)
outside the United States in accordance with Regulation S, or (3) inside
the United States in accordance with (x) Rule 144A to a person whom the
seller reasonably believes is a Qualified Institutional Buyer that is
purchasing such Securities for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the offer, sale
or transfer is being made in reliance on Rule 144A or (y) pursuant to
another available exemption from registration under the 1933 Act.
(v) Restrictions on Transfer. The transfer restrictions and the other
provisions set forth in the Offering Memorandum under the heading "Notice
to Investors", including the legend required thereby, shall apply to the
Securities except as otherwise agreed by the Company and the Initial
Purchasers.
(vi) Delivery of Offering Memorandum. Each Initial Purchaser will
deliver to each purchaser of the Securities from such Initial Purchaser, in
connection with its original distribution of the Securities, a copy of the
Offering Memorandum, as amended and supplemented at the date of such
delivery.
(b) Covenants of the Company. The Company covenants with each
Initial Purchaser as follows:
(i) Integration. The Company agrees that it will not and will cause
its Affiliates not to, directly or indirectly, solicit any offer to buy,
sell or make any offer or sale of, or otherwise negotiate in respect of,
securities of the Company of any class if, as a result of the doctrine of
"integration" referred to in Rule 502 under the 1933 Act, such offer or
sale would render invalid (for the purpose of (i) the sale of the
Securities by the Company to the Initial Purchasers, (ii) the resale of the
Securities by the Initial Purchasers to Subsequent Purchasers or (iii) the
resale of the Securities by such Subsequent Purchasers to others) the
exemption from the registration requirements of the 1933 Act provided by
Section 4(2) thereof or by Rule 144A thereunder or otherwise.
(ii) Rule 144A Information. The Company agrees that, in order to
render the Securities eligible for resale pursuant to Rule 144A under the
1933 Act, while any of the Securities remain outstanding, it will make
available, upon request, to any holder of Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to
Section 13 or 15(d) of the 1934 Act.
(iii) Restriction on Repurchases. Until the expiration of two years
after the original issuance of the Securities, the Company will not, and
will cause its Affiliates not to, resell any Securities which are
"restricted securities" (as such term is defined under
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Rule 144(a)(3) under the 1933 Act), whether as beneficial owner or
otherwise (except as agent acting as a securities broker on behalf of and
for the account of customers in the ordinary course of business in
unsolicited broker's transactions).
(c) Qualified Institutional Buyer. Each Initial Purchaser
severally and not jointly represents and warrants to, and agrees with, the
Company that it is a Qualified Institutional Buyer and an "accredited
investor" within the meaning of Rule 501(a) under the 1933 Act.
SECTION 7. Indemnification.
----------------
(a) Indemnification of Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any,
who controls any Initial Purchaser within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Memorandum or the Final Offering Memorandum (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
7(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of
any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information furnished
to the Company by any Initial Purchaser through Merrill Lynch expressly for
use in any Preliminary Offering Memorandum or the Final Offering Memoran-
19
<PAGE>
dum (or any amendment or supplement thereto) and provided, further, that
the Company shall not be liable to any Initial Purchaser under the
indemnity agreement in this paragraph (a) with respect to any Preliminary
Offering Memorandum to the extent that any such loss, claim, damage or
liability of such Initial Purchaser results from the fact that such Initial
Purchaser sold Notes to a person as to whom it shall be established that
there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Final Offering Memorandum as then amended or
supplemented in any case where such delivery is required by the 1933 Act if
the Company has previously furnished copies thereof in sufficient quantity
to such Initial Purchaser and the loss, claim, damage or liability of such
Initial Purchaser results from an untrue statement or omission or a
material fact contained in the Preliminary Offering Memorandum which was
identified in writing at such time to such Initial Purchaser and corrected
in the Final Offering Memorandum as then amended or supplemented.
(b) Indemnification of Company. Each Initial Purchaser severally
agrees to indemnify and hold harmless the Company, its directors and
officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in any Preliminary Offering Memorandum or the
Final Offering Memorandum (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Initial Purchaser through Merrill Lynch expressly for use
in any Preliminary Offering Memorandum or the Final Offering Memorandum(or
any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof
and in any event shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 7(a) above, counsel to the
indemnified parties shall be selected by Merrill Lynch, and, in the case of
parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party
may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except
with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions
in the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written
consent of the indemnified parties, settle or compromise or consent to the
entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever in respect of which indemnification or contribution
could be sought under this Section or Section 8 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of
20
<PAGE>
such litigation, investigation, proceeding 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) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a) and 7(b) above, effected without its
written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement.
SECTION 8. Contribution. If the indemnification provided for in
Section 7 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities,
claims, damages or expenses referred to therein, then each indemnifying
party shall contribute to the aggregate amount of such losses, liabilities,
claims, damages and expenses incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchasers
on the other hand from the offering of the Securities pursuant to this
Agreement or (ii) if the allocation provided by clause (i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and of the Initial Purchasers on the
other hand in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company on the one hand and
the Initial Purchasers on the other hand in connection with the offering of
the Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received
by the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Initial Purchasers
and the parties= relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of
21
<PAGE>
allocation which does not take account of the equitable considerations
referred to above in this Section 8. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party
and referred to above in this Section 8 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue or
alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no Initial
Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities purchased and sold
by it hereunder exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls
an Initial Purchaser within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as
such Initial Purchaser and each director and officer of the Company, and
each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights
to contribution as the Company. The Initial Purchasers= respective
obligations to contribute pursuant to this Section 8 are several in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of
any Initial Purchaser or controlling person, or by or on behalf of the
Company, and shall survive delivery of the Securities to the Initial
Purchasers.
SECTION 10. Termination of Agreement.
-------------------------
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the time of execution of this Agreement
or since the respective dates as of which information is given in the
Offering Memorandum, any Material Adverse Effect or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities
or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or
22
<PAGE>
economic conditions, in each case the effect of which is such as to make
it, in the judgment of the Representatives, impracticable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in any securities of the Company has been suspended or
materially limited by the Commission or the New York Stock Exchange, or if
trading generally on the American Stock Exchange or the New York Stock
Exchange or in the NASDAQ System has been suspended or materially limited,
or minimum or maximum prices for trading have been fixed, or maximum ranges
for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities
Dealers, Inc. or any other governmental authority, or (iv) if a banking
moratorium has been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further
that Sections 1, 7, 8 and 9 shall survive such termination and remain in
full force and effect.
SECTION 11. Default by One or More of the Initial Purchasers. If
one or more of the Initial Purchasers shall fail at the Closing Time or a
Date of Delivery to purchase the Securities which it or they are obligated
to purchase under this Agreement (the "Defaulted Securities"), the
Representatives shall have the right, but not the obligation, within 24
hours thereafter, to make arrangements for one or more of the
non-defaulting Initial Purchasers, or any other initial purchasers, to
purchase, each severally and not jointly, all, but not less than all, of
the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then this Agreement
or, with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the Initial Purchasers to purchase and of the
Company to sell the Additional Notes to be purchased and sold on such Date
of Delivery shall terminate without liability on the part of any
non-defaulting Initial Purchaser.
No action pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which
is after the Closing Time, which does not result in a termination of the
obligation of the Initial Purchasers to purchase and of the Company to sell
the Additional Notes to be purchased and sold on such Date of Delivery, as
the case may be, either the Representatives or the Company shall have the
right to postpone the Closing Time or the relevant Date of Delivery, as the
case may be, for a period not exceeding seven days in order to effect any
required changes in the Offering Memorandum or in any other documents or
arrangements.
SECTION 12. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given
if mailed or transmitted by any standard form of telecommunication. Notices
to the Initial Purchasers shall be directed to the Representatives at North
Tower, World Financial Center, New York, New York 10281, attention of Larry
Santoro; notices to the Company shall be directed to it at 1375
Lenoir-Rhyne Blvd., Hickory, North Carolina 28601, attention of Frank B.
Wyatt, II, Vice President, General Counsel and Secretary.
SECTION 13. Parties. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation,
other than the Initial Purchasers and the Company and their respective
successors and the controlling persons and officers and directors referred
to in Sections 7 and 8 and their heirs and legal representatives, any legal
or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of
the Initial Purchasers and the Company and their respective successors, and
said controlling persons and officers and directors and their heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from any Initial Purchaser shall be
deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a
binding agreement between the Initial Purchasers and the Company in
accordance with its terms.
Very truly yours,
COMMSCOPE, INC.
By: /s/ Jearld Leonhardt
------------------------------
Title: Executive Vice President
and Chief Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CIBC WORLD MARKETS CORP.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ David Rosenberg
----------------------------------
Authorized Signatory
For themselves and as Representatives of the other Initial Purchasers named
in Schedule A hereto.
<PAGE>
SCHEDULE A
Principal
Amount
Name of Initial Purchaser of Securities
-------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................. $ 90,000,000
CIBC World Markets Corp............................ 60,000,000
-------------
Total.............................................. $150,000,000
=============
<PAGE>
SCHEDULE B
CommScope, Inc.
$150,000,000 Convertible Subordinated Notes due 2006
1. The initial public offering price of the Securities shall be 100%
of the principal amount thereof, plus accrued interest, if any, from the
date of issuance.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be 97.5% of the principal amount thereof.
3. The interest rate on the Securities shall be 4% per annum.
<PAGE>
SCHEDULE C
List of Subsidiaries
CommScope, Inc. of North Carolina Incorporated: North Carolina
<PAGE>
Exhibit A-1
FORM OF OPINION OF FRIED, FRANK, HARRIS SHRIVER &
JACOBSON TO BE DELIVERED PURSUANT TO SECTION 5(a)
212-859-8076
December 15, 1999 (FAX: 212-859-8587)
MERRILL LYNCH & CO.Merrill Lynch, Pierce, Fenner & Smith IncorporatedCIBC
WORLD MARKETS CORP. as Representatives of the several Initial Purchasers
c/o Merrill Lynch & Co.Merrill Lynch, Pierce, Fenner & Smith
IncorporatedNorth TowerWorld Financial CenterNew York, New York 10281-1305
RE: COMMSCOPE, INC.
Ladies and Gentlemen:
We are acting as special counsel to CommScope, Inc., a Delaware
corporation (the "Company"), in connection with the Company's offering and
sale of $150,000,000 in aggregate principal amount of its 4% Convertible
Subordinated Notes due 2006 (the "Notes") (plus up to $22,500,000 in
additional principal amount issuable pursuant to the Initial Purchaser=s
over-allotment option) pursuant to the terms of a Purchase Agreement, dated
December 9, 1999 (the "Purchase Agreement"), by and among the Company,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
CIBC World Markets Corp. This opinion is delivered to you pursuant to
Section 5(a) of the Purchase Agreement. All capitalized terms used herein
that are defined in, or by reference in, the Purchase Agreement have the
meanings assigned to such terms therein, or by reference therein, unless
otherwise defined herein. With your permission, all assumptions and
statements of reliance herein have been made without any independent
investigation or verification on our part except to the extent otherwise
expressly stated, and we
Sch A-1
<PAGE>
express no opinion with respect to the subject matter or accuracy of such
assumptions or items relied upon.
In connection with this opinion, we have (i) investigated such
questions of law, (ii) examined originals or certified, conformed or
reproduction copies of such agreements, instruments, documents and records
of the Company, such certificates of public officials and such other
documents and (iii) received such information from officers and
representatives of the Company, as we have deemed necessary or appropriate
for the purposes of this opinion.
In all such examinations, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of
original and certified documents and the conformity to original or
certified documents of all copies submitted to us as conformed or
reproduction copies. As to various questions of fact relevant to the
opinions expressed herein, we have relied upon, and assume the accuracy of,
representations and warranties contained in the Purchase Agreement and
certificates and oral or written statements and other information of or
from representatives of the Company and others and assume compliance on the
part of all parties to the Purchase Agreement, the Registration Rights
Agreement, dated as of December 15, 1999 (the "Registration Rights
Agreement"), by and among the Company and the Initial Purchasers, and the
Indenture, dated as of December 15, 1999 (the "Indenture"), among the
Company and First Union National Bank, as trustee (the "Trustee") with
their covenants and agreements contained therein.
To the extent it may be relevant to the opinions expressed herein, we
have assumed that (i) the Trustee has the power and authority to enter into
and perform the Indenture, (ii) the Indenture has been duly authorized,
executed and delivered by the Trustee and constitutes a valid and binding
obligation of the Trustee, enforceable against the Trustee in accordance
with its terms, (iii) the Notes have been duly authenticated and delivered
by the Trustee and (iv) the Initial Purchasers have the power and authority
to enter into and perform the Registration Rights Agreement and that the
Registration Rights Agreement has been duly authorized, executed and
delivered by each of the Initial Purchasers and constitutes a valid and
binding obligation of each of the Initial Purchasers, enforceable against
each of the Initial Purchasers in accordance with its terms.
Based upon the foregoing and subject to the limitations,
qualifications and assumptions set forth herein, we are of the opinion
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
authority to own, lease and operate its properties and
conduct its business as described in the Offering
Memorandum and to enter into and perform its obligation
under the Purchase Agreement;
Sch A-2
<PAGE>
(ii) the Notes are in the form contemplated by the Indenture,
have been duly authorized by the Company and, when executed
by the Company and authenticated by the Trustee in
accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchasers in
accordance with the terms of the Purchase Agreement, will
be entitled to the benefits of the Indenture and will be
valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms;
(iii) the Indenture has been duly authorized, executed and
delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company
in accordance with its terms;
(iv) the Securities and the Indenture conform in all material
respects to the descriptions thereof contained in the
Offering Memorandum;
(v) the Purchase Agreement has been duly authorized, executed
and delivered by the Company;
(vi) the Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and is a valid and
binding agreement of the Company, enforceable against the
Company in accordance with its terms;
(vii) the descriptions under the captions "Description of Capital
Stock," "Description of Notes" and "Certain United States
Federal Income Tax Consequences" in the Offering
Memorandum, insofar as such descriptions constitute a
summary of the legal matters or documents referred to
therein, fairly summarize the matters referred to therein;
(viii) no filing, consent, approval, authorization or order of or
with any court or governmental agency or body of the States
of New York or Delaware or the United States of America is
required to be made or obtained by the Company for the
performance of its obligations under the Purchase
Agreement, the Registration Rights Agreement or the
Indenture, or the consummation by the Company of the
transactions therein contemplated, except such as have been
made or obtained and such as may be required under federal
and state securities or Blue Sky laws in connection with
the purchase and distribution of the Securities by the
Initial Purchasers or by the federal and state securities
laws in connection with the registration obligations under
the Registration Rights Agreement;
(ix) the Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
Sch A-3
<PAGE>
(x) it is not necessary in connection with the offer, sale and
delivery of the Notes to the Initial Purchasers in the
manner contemplated by the Purchase Agreement to qualify
the Indenture under the TIA; and
(xi) no registration under the Act of the Notes is required for
the sale of the Notes to the Initial Purchasers and to each
Subsequent Purchaser as contemplated by the Purchase
Agreement and the Offering Memorandum assuming (i) that
each Initial Purchaser is a QIB, (ii) the accuracy of, and
compliance with, the Initial Purchasers' representations,
warranties, and covenants contained in Section 6 of the
Purchase Agreement, and (iii) the accuracy of the
representations of the Company set forth in Sections 1(a)
(xxii), (xxiii) and (xxiv) of the Purchase Agreement.
In the course of the preparation by the Company of the Offering
Memorandum, we participated in conferences with certain of the officers and
representatives of, and the independent public accountants for, the Company
at which the contents of the Offering Memorandum were discussed. Between
the date of the Offering Memorandum and the time of delivery of this
opinion, we participated in additional conferences with certain of the
officers and representatives of, and independent public accountants for,
the Company at which the contents of the Offering Memorandum were discussed
to a limited extent. Given the limitations inherent in the independent
verification of factual matters and the character of determinations
involved in the process, we are not passing upon or assuming any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum, except to the extent provided in
paragraph (vii) above. Subject to the foregoing and on the basis of the
information gained in the performance of the services referred to herein,
including information obtained from the officers and other representatives
of, and the independent public accountants for, the Company, no facts have
come to our attention that cause us to believe that the Offering
Memorandum, as of its date, contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Also, subject to the foregoing, no facts have come to
our attention in the course of the proceedings described in the second
sentence of this paragraph that cause us to believe that the Offering
Memorandum, as of the date and time of the delivery of this opinion,
contains an untrue statement of a material fact or omits to the 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. In
each case, however, we express no view or belief, with respect to financial
statements, or the notes or schedules thereto, or other financial data
included in or omitted from the Offering Memorandum.
The opinions set forth above are subject to the following
qualifications:
(A) We express no opinion as to the validity, binding effect or
enforceability of any provision of the Indenture and the Registration
Rights Agreement relating to indemnification or contribution.
Sch A-4
<PAGE>
(B) We express no opinion as to the validity, binding effect or
enforceability of any provision of the Indenture, Registration Rights
Agreement or the Notes:
(1) containing any purported waiver, release, variation,
disclaimer, consent or other agreement of similar effect
(all of the foregoing, collectively, a "Waiver") by the
Company under any of such agreements to the extent limited
by provisions of applicable law (including judicial
decisions), or to the extent that such a Waiver applies to a
right, claim, duty, defense or ground for discharge
otherwise existing or occurring as a matter of law
(including judicial decisions), except to the extent that
such a Waiver is effective under, and is not prohibited by
or void or invalid under provisions of applicable law
(including judicial decisions);
(2) related to choice of governing law to the extent that the
validity, binding effect or enforceability of any such
provision is to be determined by any court other than a
court of the State of New York or a federal district court
sitting in the State of New York and applying the law of the
State of New York;
(3) specifying that provisions thereof may be waived only in
writing, to the extent that an oral agreement or an implied
agreement by trade practice or course of conduct has been
created that modifies any provision of such agreement; and
(4) purporting to give any person or entity the power to
accelerate obligations without any notice to the obligor.
(C) Our opinions above are subject to the following:
(1) bankruptcy, insolvency, reorganization, moratorium or other
laws now or hereafter in effect affecting creditors' rights
generally;
(2) general principles of equity, including, without limitation,
standards of materiality, good faith, fair dealing and
reasonableness equitable defenses and limits as to
availability of equitable remedies (whether such principles
are considered in a proceeding in equity or at law); and
(3) the application of any applicable fraudulent conveyance,
fraudulent transfer, fraudulent obligation, or preferential
transfer law or any law governing the distribution of assets
of any person now or hereafter in effect affecting
creditors' rights and remedies generally.
Sch A-5
<PAGE>
The opinions expressed herein are limited to the federal laws of the
United States of America, the laws of the State of New York and, to the
extent relevant to the opinion expressed herein, the Delaware General
Corporation Law, as currently in effect. The opinions expressed herein are
given as of the date hereof, and we undertake no obligation to supplement
this letter if any applicable laws change after the date hereof or if we
become aware of any facts that might change the opinions expressed herein
after the date hereof or for any other reason.
The opinions expressed herein are solely for your benefit in
connection with the Purchase Agreement and may not be relied on in any
manner or for any purpose by any other person or entity and may not be
quoted in whole or in part without our prior written consent.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By:
-----------------------------------------------
Lois Herzeca
Sch A-6
<PAGE>
Exhibit A-2
FORM OF OPINION OF FRANK B. WYATT, IITO BE DELIVERED PURSUANT TO SECTION 5(b)
MERRILL LYNCH & CO.Merrill Lynch, Pierce, Fenner & Smith Incorporated
CIBC WORLD MARKETS CORP. as Representatives of the several Initial Purchasers
c/o Merrill Lynch & Co.Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower, World Financial Center, New York, New York 10281-1305
Dear Sirs and Mesdames:
I am General Counsel of CommScope, Inc., a Delaware corporation
(the "Company"). This opinion is being delivered to you pursuant to Section
5(b) of the Purchase Agreement, dated December 9, 1999 (the "Purchase
Agreement"), among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and CIBC World Markets Corp. All capitalized
terms used herein that are defined in the Purchase Agreement have the
respective meanings set forth therein, unless otherwise defined herein.
With your permission, with respect to the opinions expressed herein, all
assumptions and statements of reliance herein have been made without any
independent investigation or verification on my part, except to the extent
otherwise expressly stated, and I express no opinion with respect to the
subject matter or accuracy of such assumptions or items relied upon.
I, or outside attorneys under my direction and control, have
examined the originals, or certified, conformed or reproduction copies, of
all such records, agreements, instruments and documents as I have deemed
relevant or necessary as the basis for the opinions hereinafter expressed.
In all such examinations, I have assumed the authenticity of all records,
agreements and documents and the truth of all representations set forth
therein, the genuineness of all signatures on original or certified copies
and the conformity to original or certified copies of all copies submitted
to me as conformed or reproduction copies. As to various questions of fact
relevant to such opinion, I have relied upon, and assumed the accuracy of,
certificates and oral or written statements and other information of or
from public officials, officers or representatives of the Company, and
others.
Sch A-7
<PAGE>
Based upon the foregoing, and subject to the limitations,
qualifications, and assumptions set forth herein, I am of the opinion that:
(1) The Company is duly qualified to transact business as a
foreign corporation, and is in good standing, under the laws of each
jurisdiction in which it owns or leases properties or conducts
business so as to require such qualification, or is subject to no
material liability or disability by reason of failure to be so
qualified in any such jurisdiction.
(2) The Company has an authorized capitalization as set forth in
the Offering Memorandum in the column entitled "Actual" under the
caption "Capitalization", and all of the issued shares of capital
stock of the Company have been duly and validly authorized and issued,
are fully paid and nonassessable, and none of the outstanding shares
of capital stock of the Company was issued in violation of the
preemptive or other similar rights of any security holder of the
Company.
(3) Each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority
to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum and is duly qualified to
transact business, as a foreign corporation, and is in good standing,
in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure to qualify or to be in good
standing would not result in a Material Adverse Effect, except as
otherwise disclosed in the Offering Memorandum; all of the issued and
outstanding capital stock of each Subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and, to the best
of my knowledge, is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(4) The Conversion Shares have been duly authorized and validly
reserved for issuance upon conversion of the Notes by all necessary
corporate action of the Company
Sch A-8
<PAGE>
and, when duly issued by the Company upon such conversion, will be
validly issued, fully paid and nonassessable; no holder thereof will
be subject to personal liability for obligations of the Company solely
by reason of being such a holder; and the issuance of the Conversion
Shares will not be subject to preemptive or similar rights.
(5) To the best of my knowledge and other than as set forth in
the Offering Memorandum, 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, individually or in the aggregate,
would have, or may reasonably be expected to have, a Material Adverse
Effect; and, to the best of my knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others.
(6) To the best of my knowledge, (a) neither the Company nor any
of its subsidiaries is in violation of its respective Certificate of
Incorporation or By-laws and (b) no default by the Company or any of
its subsidiaries exists in the due performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument described or referred to in the Offering
Memorandum, except as would not have or reasonably be expected to have
a Material Adverse Effect.
(7) The execution, delivery and performance of the Purchase
Agreement, the DTC Agreement, the Indenture, the Registration Rights
Agreement and the Notes and the consummation of the transactions
contemplated in the Purchase Agreement and in the Offering Memorandum
(including the use of the proceeds from the sale of the Securities as
described in the Offering Memorandum under the caption "Use Of
Proceeds") and compliance by the Company with its obligations under
the Purchase Agreement, the Indenture, the Registration Rights
Agreement and the Notes do not and 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 Agreement and Instruments which are
material to the Company and its subsidiaries taken as a whole, nor
will such action result in any violation of the provisions
Sch A-9
<PAGE>
of the Certificate of Incorporation or By-laws of the Company or any
statute or any order, rule or regulation known to me of any court or
governmental agency or body having jurisdiction over the Company or
any of the subsidiaries or any of their properties.
The opinions set forth above are subject to the following
qualifications:
A. With respect to the opinion expressed in paragraphs 6 and 7
above: (i) I have made no independent investigation as to
whether the Agreements and Instruments which are material to
the Company and its subsidiaries, taken as a whole, and
which are governed by the laws of any jurisdiction other
than the State of North Carolina, will be enforced as
written under the laws of such jurisdiction; (ii) I express
no opinion with respect to any conflict with or any breach
or violation of, or default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or
instrument not ascertainable from the face of such
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument, or arising under or based upon any
cross-default provisions insofar as such conflict, breach,
violation or default related to a default under an agreement
not known to me 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;
and (iii) I have relied as to matters of fact upon, and
assumed the accuracy of, a certificate of a senior financial
officer of the Company, attached thereto as Annex A, with
respect to any covenant of a financial or numerical nature
or that requires computation in any indenture, mortgage,
deed of trust, loan agreement or other agreement or
instrument known to me 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.
Sch A-10
<PAGE>
B. My opinions are subject to (i) applicable bankruptcy,
insolvency, moratorium, fraudulent conveyance and other
similar laws affecting creditors' rights and remedies
generally, and (ii) general principles of equity including,
without limitation, standards of materiality, good faith,
fair dealing and reasonableness, equitable defenses and
limits as to the availability of equitable remedies, whether
such principles are considered in a proceeding at law or in
equity.
C. The opinions expressed above are subject to the effect of,
and I express no opinions herein as to, the application of
the securities or Blue Sky laws of any state of the United
States.
The opinions expressed herein are limited to the laws of the
United States of America and the laws of the State of North Carolina and,
to the extent relevant to the opinions expressed herein, the General
Corporation Law of the State of Delaware, each as currently in effect. The
opinions expressed herein are given as of the date hereof, and I undertake
no obligation to supplement this letter if any applicable laws change after
the date hereof or if I become aware of any facts that might change the
opinions expressed herein after the date hereof or for any other reason.
The opinions expressed herein are solely for your benefit in
connection with the Purchase Agreement and may not be relied on in any
manner or for any purpose by any other person or entity and may not be
quoted in whole or in part without my prior written consent.
Very truly yours,
Frank B. Wyatt, II
General Counsel
cc: Jearld L. Leonhardt
Sch A-11
<PAGE>
FORM OF FINANCIAL OFFICER'S CERTIFICATE
Annex A to Exhibit A
The undersigned, Jearld L. Leonhardt, the Executive Vice
President and Chief Financial Officer of CommScope, Inc., a Delaware
corporation (the "Company"), hereby certifies, solely as a financial
officer of the Company and not personally, that the compliance by the
Company with all of the provisions of the purchase agreement, dated as of
December 9, 1999 (the "Purchase Agreement"), among the Company, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and CIBC
World Markets Corp., the DTC Agreement, the Indenture, the Registration
Rights Agreement and the Notes and the consummation of the transactions
therein contemplated will not conflict with or result in a breach or a
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 the undersigned 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 and which is material to the
Company and its subsidiaries.
Capitalized terms used herein without definitions shall have the
meanings ascribed to them in the Purchase Agreement.
Dated: December __, 1999
---------------------------------
Jearld L. Leonhardt
Executive Vice President
and Chief Financial Officer
<PAGE>
Annex A to Exhibit A
Exhibit B
Form of Registration Rights Agreement
EXHIBIT 4.5
COMMSCOPE, INC.
AS ISSUER
AND
FIRST UNION NATIONAL BANK,
AS TRUSTEE
INDENTURE
DATED AS OF DECEMBER 15, 1999
4% CONVERTIBLE SUBORDINATED NOTES DUE 2006
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions.................................................2
Section 1.2 Compliance Certificates and Opinions.......................12
Section 1.3 Form of Documents Delivered to Trustee.....................13
Section 1.4 Acts of Holders; Record Dates..............................13
Section 1.5 Notices, Etc. to Trustee and the Company...................15
Section 1.6 Notice to Holders; Waiver..................................15
Section 1.7 Conflict with Trust Indenture Act..........................16
Section 1.8 Effect of Headings and Table of Contents...................16
Section 1.9 Successors and Assigns.....................................16
Section 1.10 Separability Clause........................................16
Section 1.11 Benefits of Indenture......................................16
Section 1.12 Governing Law..............................................17
Section 1.13 Legal Holidays.............................................17
Section 1.14 Counterparts...............................................17
ARTICLE II
SECURITY FORMS
Section 2.1 Forms Generally............................................17
Section 2.2 Form of Face of Security...................................19
Section 2.3 Form of Reverse of Security................................22
Section 2.4 Form of Trustee's Certificate of Authentication............31
Section 2.5 Form of Conversion Notice..................................31
Section 2.6 Form of Certification......................................33
Section 2.7 Form of Option of Holder to Elect Purchase.................34
Section 2.8 Form of Assignment.........................................35
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<PAGE>
ARTICLE III
THE SECURITIES
Section 3.1 Title and Terms............................................36
Section 3.2 Denominations..............................................37
Section 3.3 Execution, Authentication, Delivery and Dating.............37
Section 3.4 Temporary Securities.......................................38
Section 3.5 Registration; Registration of Transfer and Exchange........38
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities...........43
Section 3.7 Payment of Interest; Interest Rights Preserved.............44
Section 3.8 Persons Deemed Owners......................................46
Section 3.9 Cancellation...............................................46
Section 3.10 Computation of Interest....................................47
Section 3.11 CUSIP Numbers..............................................47
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture....................47
Section 4.2 Application of Trust Money.................................49
ARTICLE V
REMEDIES
Section 5.1 Events of Default..........................................49
Section 5.2 Acceleration of Stated Maturity;
Rescission and Annulment...................................51
Section 5.3 Collection of Indebtedness and Suits for
Enforcement by Trustee....................................52
Section 5.4 Trustee May File Proofs of Claim...........................53
Section 5.5 Trustee May Enforce Claims Without Possession
of Securities.............................................54
Section 5.6 Application of Money Collected.............................54
Section 5.7 Limitation on Suits........................................55
Section 5.8 Unconditional Right of Holders to Receive
Principal, Premium and Interest and to Convert............55
ii
<PAGE>
Section 5.9 Restoration of Rights and Remedies.........................56
Section 5.10 Rights and Remedies Cumulative.............................56
Section 5.11 Delay or Omission Not Waiver...............................56
Section 5.12 Control by Holders.........................................56
Section 5.13 Waiver of Past Defaults....................................57
Section 5.14 Undertaking for Costs......................................57
Section 5.15 Waiver of Usury, Stay or Extension Laws....................58
ARTICLE VI
THE TRUSTEE
Section 6.1 Certain Duties and Responsibilities........................58
Section 6.2 Notice of Defaults.........................................58
Section 6.3 Certain Rights of Trustee..................................59
Section 6.4 Not Responsible for Recitals or Issuance of Securities.....60
Section 6.5 May Hold Securities........................................60
Section 6.6 Money Held in Trust........................................61
Section 6.7 Compensation and Reimbursement.............................61
Section 6.8 Disqualification: Conflicting Interests....................62
Section 6.9 Corporate Trustee Required; Eligibility....................62
Section 6.10 Resignation and Removal; Appointment of Successor..........62
Section 6.11 Acceptance of Appointment by Successor.....................64
Section 6.12 Merger, Conversion, Consolidation or Succession
to Business...............................................64
Section 6.13 Preferential Collection of Claims Against Company..........65
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1 Company to Furnish Trustee Names and
Addresses of Holders......................................65
Section 7.2 Preservation of Information; Communications to Holders.....66
Section 7.3 Reports by Trustee.........................................66
Section 7.4 Reports by Company.........................................66
iii
<PAGE>
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1 Company May Consolidate, Etc., Only on Certain Terms.......67
Section 8.2 Successor Substituted......................................68
ARTICLE IX
AMENDMENTS
Section 9.1 Without Consent of Holders.................................68
Section 9.2 With Consent of Holders....................................69
Section 9.3 Compliance with Trust Indenture Act........................70
Section 9.4 Revocation and Effect of Consents, Waivers and Actions.....71
Section 9.5 Notation on or Exchange of Securities......................71
Section 9.6 Trustee to Sign Supplemental Indentures....................71
Section 9.7 Effect of Supplemental Indentures..........................71
ARTICLE X
COVENANTS
Section 10.1 Payment of Securities......................................72
Section 10.2 Maintenance of Office or Agency............................72
Section 10.3 Money for Security Payments To Be Held in Trust............73
Section 10.4 Statement by Officers as to Default........................74
Section 10.5 Existence..................................................75
Section 10.6 Delivery of Certain Information............................75
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1 Right to Redeem; Notices to Trustee........................75
Section 11.2 Selection of Securities to Be Redeemed.....................76
iv
<PAGE>
Section 11.3 Notice of Redemption.......................................76
Section 11.4 Effect of Notice of Redemption.............................77
Section 11.5 Deposit of Redemption Price................................78
Section 11.6 Securities Redeemed in Part................................78
Section 11.7 Conversion Arrangement on Call for Redemption..............78
ARTICLE XII
SUBORDINATION OF SECURITIES
Section 12.1 Securities Subordinate to Senior Indebtedness..............79
Section 12.2 Payment Over of Proceeds upon Dissolution, Etc.............79
Section 12.3 No Payment When Senior Indebtedness in Default.............80
Section 12.4 Payment Permitted If No Default............................82
Section 12.5 Subrogation to Rights of Holders of Senior Indebtedness....82
Section 12.6 Provisions Solely To Define Relative Rights................83
Section 12.7 Trustee To Effectuate Subordination........................83
Section 12.8 No Waiver of Subordination Provisions......................83
Section 12.9 Notice to Trustee..........................................84
Section 12.10 Reliance on Judicial Order or Certificate
of Liquidating Agent.......................................85
Section 12.11 Trustee Not Fiduciary for Holders of Senior Indebtedness...85
Section 12.12 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights..........................86
Section 12.13 Article Applicable to Paying Agents........................86
Section 12.14 Certain Conversions Deemed Payment.........................86
ARTICLE XIII
CONVERSION OF SECURITIES
Section 13.1 Conversion Privilege. .....................................87
Section 13.2 Exercise of Conversion Privilege...........................88
Section 13.3 Fractions of Shares........................................89
Section 13.4 Adjustment of Conversion Price.............................90
Section 13.5 Notice of Adjustments of Conversion Price..................99
Section 13.6 Notice of Certain Corporate Action........................100
Section 13.7 Company's Obligation Regarding Common Stock...............101
v
<PAGE>
Section 13.8 Taxes on Conversions......................................102
Section 13.9 Covenant as to Common Stock...............................102
Section 13.10 Cancellation of Converted Securities......................102
Section 13.11 Provisions in Case of Reclassification, Consolidation,
Merger or Sale of Assets.................................102
Section 13.12 Company's Obligation......................................103
Section 13.13 Restrictions on Common Stock Issuable Upon Conversion.....103
ARTICLE XIV
RIGHT TO REQUIRE REPURCHASE
Section 14.1 Purchase of Securities at Option of the Holder
upon Change in Control...................................104
Section 14.2 Notices; Method of Exercising Repurchase Right, Etc.......104
Section 14.3 Certain Definitions.......................................107
Section 14.4 References to Change in Control Purchase Price............109
Section 14.5 Covenant to Comply with Securities Laws upon
Purchase of Securities...................................110
Section 14.6 Repayment to the Company..................................110
vi
<PAGE>
INDENTURE, dated as of December, 15 1999, between CommScope,
Inc., a corporation duly organized and existing under the laws of the State
of Delaware (herein called the "Company") and First Union National Bank, a
New York banking corporation (herein called the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the creation of an issue
of its 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 to provide for the issuance of its 4%
Convertible Subordinated Notes due 2006 (herein called the "Securities") by
the Company;
WHEREAS, the Company, pursuant to the Purchase Agreement (the
"Purchase Agreement") dated December 9, 1999, among the Company and the
Initial Purchasers named therein, will issue and sell up to $150,000,000
aggregate principal amount (or $172,500,000 if the overallotment option is
exercised) of its Securities;
WHEREAS, all things necessary to make the Securities, when
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company, and to make
this Indenture a valid agreement of the Company, in accordance with their
and its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
<PAGE>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise
requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or Section, as the case may
be, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, 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.
2
<PAGE>
"Agent Members" has the meaning specified in Section 2.1(b).
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, in each case to
the extent applicable to such transaction and as in effect from time to
time.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States federal or state law
relating to bankruptcy, insolvency, receivership, winding-up, liquidation,
reorganization or relief of debtors or any amendment to, succession to or
change in any such law.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors, or a Committee thereof, and to be in
full force and effect on the date of such certification, and delivered to
the Trustee.
"Business Day" means a day on which banking institutions are open
for business and carrying out transactions in Dollars at the relevant place
of payment.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at
any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Stock" includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which is not subject to redemption by the
Company. However, subject to the provisions of Article Thirteen, shares
issuable on conversion of Securities shall include only shares of the class
designated as Common Stock of the Company at the date of this instrument or
shares of any class or classes resulting from any reclassifications thereof
and which have no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which are not subject to redemption by the
3
<PAGE>
Company; provided, that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable on
conversion shall be substantially in the proportion which the total number
of shares of such class resulting from all such reclassifications bears to
the total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board and/or
its Chief Executive Officer, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary,
and delivered to the Trustee.
"Conversion Agent" shall have the meaning set forth in Section
2.3(3).
"Corporate Trust Office" means the principal office of the
Trustee in Charlotte, North Carolina, at which at any particular time its
corporate trust business shall be administered and which at the date of
this Indenture is 401 S. Tryon Street, Charlotte, North Carolina, 12th
Floor, Attention: Shannon Schwartz.
"Corporation" means a corporation, association, company
(including, without limitation, a limited liability company), joint-stock
company or business trust.
"Credit Agreement" means that certain Credit Agreement dated as
of July 23, 1997 by and among the Company and the lenders party thereto
from time to time and The Chase Manhattan Bank, as Administrative Agent,
and the other financial institutions named therein as Co-Agents, including
any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
restated, modified, increased, renewed, refunded, replaced or refinanced
from time to time, whether or not with the same parties.
4
<PAGE>
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Definitive Security" means a certificated Security registered in
the name of the Holder thereof.
"Depositary" means, with respect to the Securities issued in
whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as
Depositary for such Securities as contemplated by Section 3.5.
"Dollar" 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" has the meaning specified in Section 2.3.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934 as it
may be amended from time to time, and any successor act thereto, and the
rules and regulations of the Commission promulgated thereunder.
"Financing Entity" has the meaning specified in the definition of
the term "Senior Indebtedness".
"Global Security" has the meaning specified in Section 2.1.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this instrument and any such supplemental
indenture, respectively.
5
<PAGE>
"Initial Purchasers" means Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and CIBC World Markets Corp.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Issue Date" means the date of first issuance of the Securities
under this Indenture.
"Liquidated Damages" shall mean liquidated damages paid to all
holders of Registrable Securities (as defined in the Registration Rights
Agreement) in accordance with and pursuant to the provisions of Section
2(e) of the Registration Rights Agreement.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, call for redemption,
exercise of the conversion or repurchase right or otherwise.
"Notice of Default" means a written notice of the kind specified
in Section 5.1(3) or 5.1(7).
"Officers' Certificate" means a certificate signed by any of the
Chairman of the Board and/or its Chief Executive Officer, the President or
a Vice President, and by any of the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may
be an employee of the Company.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
6
<PAGE>
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities; provided that,
if such Securities are to be redeemed, notice of such redemption shall
have been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee shall have been made;
(iii) Securities which have been paid pursuant to Section
3.6 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 which have been converted pursuant to
Article XIII;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken
any request, demand, authorization, direction, notice, consent, waiver or
other action hereunder as of any date, Securities owned by the Company or
any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice,
consent, waiver or other action, only Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other
obligor.
"Paying Agent" means any Person authorized by the Company to pay
the principal of (and premium, if any) or interest on any Securities on
behalf of the Company.
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"Person" means any individual, Corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 3.6 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost
or stolen Security.
"Qualified Institutional Buyer" means a "qualified institutional
buyer" as defined in Rule 144A.
"Redemption Date"; when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed in whole or in part, means the price at which it is to be redeemed
as set forth in the Securities.
"Registration Rights Agreement" means that certain Registration
Rights Agreement, dated December 15, 1999, between the Company and the
Initial Purchasers.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the close of business on June 1 or December 1 (whether
or not a Business Day), as the case may be, next preceding such Interest
Payment Date.
"Responsible Officer", when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant
secretary, assistant treasurer, trust officer or any other officer of the
Trustee who customarily performs functions similar to those performed by
the Persons who at the time shall be such officers, respectively, or to
whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.
8
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"Restricted Security" means a Security required to bear the
restrictive legend set forth in the form of Security set forth in Section
2.2 of this Indenture.
"Rule 144A" has the meaning specified in Section 3.5.
"Rule 144A Information" has the meaning specified in Section
10.6.
"Sale Price" on any Trading Day means the closing per share sale
price for the Common Stock (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case the
average of the average bid and the average ask prices) on such Trading Day
as reported by the New York Stock Exchange or, if the Common Stock is not
then listed thereon, such other national or regional securities exchange
upon which the Common Stock is listed on such Trading Day, as reported in
composite transactions for such exchange. If the Common Stock is not listed
on the New York Stock Exchange or a United States national or regional
stock exchange or quoted on the Nasdaq National Market, the Company shall
be entitled to determine the "Sale Price" on the basis of such quotation as
it deems, in good faith, to be appropriate.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture and "Security" means one of such Securities.
"Securities Act" means the Securities Act of 1933 as it may be
amended from time to time, and any successor act thereto, and the rules and
regulations of the Commission promulgated thereunder.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
"Senior Indebtedness" means in respect of the Company, whether
now or hereafter incurred: (i) the principal, premium, if any, interest and
all other amounts owed in respect of all of the Company's (A) indebtedness
for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments, (ii) all obligations of the
Company (including all interest accruing after the commencement of any
bankruptcy proceeding, whether or not a claim for post-petition interest is
allowed as a claim in any such proceeding) payable under the Credit
Agreement whether outstanding on the date of this Indenture or thereafter
created, incurred, assumed or guaranteed or in effect guaranteed by the
9
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Company, (iii) all capital lease obligations of the Company, (iv) all
obligations of the Company issued or assumed as the deferred purchase price
of property, all conditional sale obligations of the Company and all
obligations of the Company under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business), (v) all obligations of the Company for the reimbursement of any
letter of credit, banker's acceptance, security purchase facility or
similar credit transaction, (vi) all obligations of the type referred to in
clauses (i) through (v) above of other persons for the payment of which the
Company is responsible or liable as obligor, guarantor or otherwise, and
(vii) all obligations of the type referred to in clauses (i) through (vi)
above of other persons secured by any lien on any property or asset of the
Company (whether or not such obligation is assumed by the Company), except
for (1) any such indebtedness that is by its terms subordinated to or pari
passu with the Securities and (2) any indebtedness between or among the
Company or its affiliates, including all other debt securities and
guarantees in respect of those debt securities issued to any trust, or
trustee of such trust, partnership or other entity affiliated with the
Company that is, directly or indirectly, a financing vehicle of the Company
(a "Financing Entity") in connection with the issuance by such Financing
Entity of preferred securities or other securities that rank pari passu
with, or junior to, the Securities.
"Share Certificate" means a certificate evidencing ownership of
shares of Common Stock.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which the principal of such
Security or such installment of principal or interest is due and payable.
"Subsidiary" of any Person means (i) a corporation more than 50%
of the outstanding Voting Stock of which is owned, directly or indirectly,
by such Person or by one or more other Subsidiaries of such Person, or by
such Person and one or more Subsidiaries thereof or (ii) any other Person
(other than a corporation) in which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority
ownership and power to direct the policies, management and affairs thereof.
10
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"Surrendered Securities" has the meaning specified in Section
2.6.
"Trading Day" means each day on which the securities exchange or
quotation system which is used to determine the Sale Price is open for
trading or quotation.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed and the rules
and regulations thereunder; provided, however, that in the event the Trust
Indenture Act of 1939 or such rules and regulations are amended after such
date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 and such rules and regulations
as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean such successor Trustee.
"United States" means the United States of America (including the
States thereof and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
"U.S. Government Obligations" means securities that are (x)
direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (y) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of
the United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act of
1933, as amended), as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such
U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the
specific payment of principal of or interest on the U.S. Government
Obligation evidenced by such depository receipt.
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"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or
a word or words added before or after the title "vice president".
"Voting Stock" of any Person means capital stock of such Person
which ordinarily has voting power for the election of directors (or Persons
performing similar functions of such Person), whether at all times or only
so long as no senior class of securities has such voting power by reason of
any contingency.
Section 1.2 Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required
under the Trust Indenture Act or reasonably requested by the Trustee in
connection with such application or request. Each such certificate or
opinion shall be given in the form of an Officers' Certificate, if to be
given by an officer of the Company, or an opinion of Counsel, if to be
given by counsel, and shall comply with the applicable requirements of the
Trust Indenture Act and any other applicable requirement set forth in this
Indenture.
Every certificate or Opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) 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;
(c) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
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Section 1.3 Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of, only
one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect
to some matters and one or more other such Persons as to other matters, and
any such Person may certify or give an opinion as to such matters in one or
several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or
opinion of counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
Section 1.4 Acts of Holders; Record Dates.
-----------------------------
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or
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<PAGE>
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.3) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which the
Trustee or the Company, as the case may be, deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or
take any request, demand, authorization, direction, notice, consent, waiver
or other action, or to vote on any action, authorized or permitted to be
given or taken by Holders. 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
7.1) prior to such first solicitation or vote, as the case may be. With
regard to any record date, only the Holders on such date (or their duly
designated proxies) shall be entitled to give or take, or vote on, the
relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Security.
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(f) Without limiting the foregoing, a Holder entitled hereunder
to give or take any such action with regard to any particular Security may
do so with regard to all or any part of the principal amount of such
Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any different part of
such principal amount.
Section 1.5 Notices, Etc. to Trustee and the Company.
----------------------------------------
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Trustee at its Corporate Trust Office, Attention:
Shannon Schwartz, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Company addressed to it at the address of its principal office at
CommScope, Inc., 1375 Lenoir-Rhyne Blvd., Hickory, N.C. 28601, Attention:
General Counsel, or at any other address previously furnished in writing to
the Trustee by the Company.
Section 1.6 Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at such Holder's address as it appears in
the Security Register, not later than the latest date (if any), and not
earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect
to other Holders. Any notice when mailed to a Holder in the aforesaid
manner shall be conclusively deemed to have been received by such Holder
whether or not actually received by such Holder. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by
the Person entitled to receive such notice, either before or after the
event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing
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shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose
hereunder.
Section 1.7 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.
Section 1.8 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 1.9 Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
Section 1.10 Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 1.11 Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the holders of Senior Indebtedness and the Holders of
Securities, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
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Section 1.12 Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS.
Section 1.13 Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security or the last date on which a Holder has the
right to convert his Securities shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal or conversion of the
Securities need not be made on such date, but may be made on the next
succeeding Business Day (except that, if such Business Day is in the next
succeeding calendar year, such Interest Payment Date, Redemption Date or
Stated Maturity, as the case may be, shall be the immediately preceding
Business Day) with the same force and effect as if made on the Interest
Payment Date or Redemption Date, or at the Stated Maturity or on such last
day for conversion, provided, that no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be.
Section 1.14 Counterparts. 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.
ARTICLE II
SECURITY FORMS
Section 2.1 Forms Generally. The Securities and the Trustee's
certificate of authentication shall be in substantially the form set forth
in this Article, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture, and
may have such letters, numbers or other marks of identification and such
legends or endorsements placed thereon as may be required to comply with
the rules of any securities exchange or Depositary therefor or as may,
consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.
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The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner,
all as determined by the officers executing such Securities, as evidenced
by their execution of such Securities.
In certain cases described elsewhere herein, the legends set
forth in the first through fourth paragraphs of Section 2.2 may be omitted
from Securities issued hereunder.
(a) Global Securities. The Securities shall be issued in fully
registered book-entry form in one or more Global Securities (each a "Global
Security"), without interest coupons, substantially in the form of Security
set forth in Sections 2.2 and 2.3, with such applicable legends as are
provided for in Section 2.2, except as otherwise permitted herein. Such
Global Securities shall be registered in the name of a nominee of the
Depositary and deposited with the Trustee, as custodian for the Depositary,
duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of a Global Security
may from time to time be increased or decreased, as appropriate, by
adjustments made on the records of the Trustee, as custodian for the
Depositary, to reflect transfers to another Global Security, redemptions,
repurchases and conversions.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only
to a Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b), authenticate and deliver initially one or more
Global Securities that (a) shall be registered in the name of the
Depositary for such Security or Global Securities or the nominee of such
Depositary and (b) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's instructions or held by the Trustee as
custodian for the Depositary.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or by the Trustee as the
custodian of the Depositary or under such Global Security, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Security for
all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
18
<PAGE>
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of
such Depositary governing the exercise of the rights of a holder of a
beneficial interest in any Global Security.
(c) Definitive Securities. Except as provided in Section 3.5(h),
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.
Section 2.2 Form of Face of Security.
------------------------
[INCLUDE UNLESS PURSUANT TO SECTION 3.5(d) OF THE INDENTURE, THE
COMPANY DETERMINES THAT THE FOLLOWING LEGEND MAY BE REMOVED -- THIS
SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE ASECURITIES ACT@), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
ARESALE RESTRICTION TERMINATION DATE@), WHICH IS TWO YEARS AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR
ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) FOR SO LONG AS
THE NOTES AND THE COMMON STOCK ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A AQUALIFIED INSTITUTIONAL
BUYER@ AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (C)
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PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY=S AND THE TRUSTEE=S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST
OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.]
[INCLUDE IF SECURITY IS A GLOBAL SECURITY DEPOSITED WITH DTC B
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY 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 TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO., OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN ARTICLE THREE OF THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF.]
20
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CommScope, Inc.
4% Convertible Subordinated Debentures Due 2006
No. Principal Amount: $
Cusip No. 203372AA5
Issue Date: December 15, 1999
CommScope, Inc., a corporation duly organized and existing under
the laws of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to __________, or registered assigns, the
principal sum of ___________ Dollars [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 $________ 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 as
specified on the other side of this Security.
This Security is convertible as specified on the other side of
this Security. All capitalized terms used herein without definition shall
have the respective meanings assigned thereto in the Indenture referred to
on the other side of this Security.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated:
------------------
21
<PAGE>
COMMSCOPE, INC.
By:
-------------------------------
Name:
Title:
[Seal]
Attest:
- ---------------------------------------
Name:
Title:
Section 2.3 Form of Reverse of Security.
---------------------------
(1) Interest. The Company promises to pay interest on the
principal amount of this Security at the rate per annum of 4% from December
15, 1999 until maturity. The Company will pay interest semiannually on June
15, and December 15 of each year (each an "Interest Payment Date") to
holders of record at the close of business on each June 1 or December 1
(whether or not a business day) (each a "Regular Record Date") immediately
preceding such Interest Payment Date. Interest on the Securities will
accrue from the most recent date to which interest has been paid or duly
provided or, if no interest has been paid, from the Issue Date. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal, or if shares of Common
Stock (or cash in lieu of fractional shares) in respect of a conversion of
this Security in accordance with the terms of Article XIII of the Indenture
are not delivered when due, at the rate borne by the Securities plus 1% per
annum, and it shall pay interest on overdue installments of interest at the
same rate to the extent lawful. All such overdue interest shall be payable
on demand.
(2) Method of Payment. Subject to the terms and conditions of the
Indenture, the Company will make payments in respect of the principal of,
premium, if any, and interest payable in cash on this Security, and in
respect of Redemption Prices to Holders who surrender Securities to a
Paying Agent to collect such payments in respect of the Securities. The
Company will pay cash amounts in
22
<PAGE>
money of the United States of America that at the time of payment is legal
tender for payment of public and private debts. However, the Company may
make such cash payments by check payable in such money.
(3) Paying Agent; Registrar; Conversion Agent. Initially, First
Union National Bank (the "Trustee"), will act as Paying Agent, Registrar
and Conversion Agent (the "Conversion Agent"). The Company may appoint and
change any Paying Agent, Registrar or co-registrar or Conversion Agent
without notice, other than notice to the Trustee, except that the Company
will maintain at least one Paying Agent in the State of New York, City of
New York, Borough of Manhattan. The Company or any of its Subsidiaries or
Affiliates incorporated in the United States may act as Paying Agent,
Registrar or co-registrar or Conversion Agent.
(4) Indenture. The Company issued the Securities under an
Indenture dated as of December 15, 1999 (the "Indenture"), among the
Company and the Trustee. The terms of the Securities include those stated
in the Indenture and those made part of the Indenture by reference to the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as in effect from time to time (the "TIA").
Capitalized terms used herein and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such
terms, and Holders are referred to the Indenture and the TIA for a
statement of those terms.
The Securities are unsecured subordinated obligations of the
Company limited to the aggregate principal amount specified in Section 3.1
of the Indenture.
(5) Redemption at the Option of the Company. No sinking fund is
provided for this Security. The Securities may not be redeemed at the
option of the Company prior to December 15, 2002. The Securities (other
than those Securities that have been converted in accordance with the terms
of the Indenture) are subject to redemption at the option of the Company
upon not less than 30 days' or more than 60 days' notice by mail (unless a
shorter notice is deemed satisfactory by the Trustee) to each Holder of
Securities, as a whole or from time to time in part, at any time on or
after December 15, 2002. The Redemption Prices (expressed as percentages of
the principal amount) shall be as set forth below for Securities redeemed
during the following 12-month periods:
23
<PAGE>
PERIOD REDEMPTION PRICE
- ------ ----------------
December 15, 2002 through December 14, 2003 102.2857%
December 15, 2003 through December 14, 2004 101.7143%
December 15, 2004 through December 14, 2005 101.1429%
and thereafter at a Redemption Price equal to 100.5714% of the principal
amount, together, in the case of any such redemption, with accrued interest
to (but not including) the Redemption Date (subject to the right of holders
of record on the Regular Record Date to receive interest on the related
Interest Payment Date). Any redemption of Securities must be in integral
multiples of $1,000.
If fewer than all of the Securities are to be redeemed, the
Trustee will select the Securities to be redeemed in principal amounts at
maturity of $1,000 or integral multiples thereof by lot, pro rata or by
another method the Trustee selects. If a portion of a Holder's Securities
is selected for partial redemption and that holder converts a portion of
those Securities prior to the redemption, the converted portion shall be
deemed, solely for purposes of determining the aggregate principal amount
of the Securities to be redeemed by the Company, to be of the portion
selected for redemption.
(6) Notice of Redemption. Notice of Redemption will be mailed by
first class mail at least 30 days but not more than 60 days before the
Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee) to each Holder of Securities to be redeemed at the Holder's
registered address. If money sufficient to pay the Redemption Price of all
Securities (or portions thereof which are in an integral multiple of $1,000
in principal amount) to be redeemed on the Redemption Date is deposited
with the Paying Agent prior to or on the Redemption Date, immediately after
such Redemption Date interest shall cease to accrue on such Securities or
portions thereof.
(7) Purchase by the Company at the Option of the Holder. In
certain circumstances involving a Change in Control (as defined in the
Indenture), subject to the terms and conditions of the Indenture, each
Holder shall have the right to require the Company to repurchase all or
part of its Securities at a repurchase price equal to 100% of the principal
amount thereof, together with accrued and unpaid interest through the
Change in Control Purchase Date (as defined in the Indenture)
24
<PAGE>
(subject to the right of holders of record on the Regular Record Date to
receive interest on the related Interest Payment Date).
The Holder has the right to withdraw any Change in Control
Purchase Notice by delivering to the Paying Agent prior to the close of
business on the Change in Control Purchase Date a written notice, in
substantially the form and manner set forth in Article XIV of the
Indenture.
If cash sufficient to pay the Change in Control Purchase Price of
all Securities (or any portion thereof which is in an integral multiple of
$1,000 in principal amount) to be purchased prior to or on the Change in
Control Purchase Date is deposited with the Paying Agent on the Change in
Control Purchase Date, this Security shall cease to be outstanding and
interest shall cease to accrue on this Security (or such portions thereof)
and will be deemed paid, whether or not this Security is delivered to the
Paying Agent, immediately after such Change in Control Purchase Date and
the Holder shall have no other rights as such (other than the right to
receive the Change in Control Purchase Price upon surrender of this
Security or portion hereof).
(8) Conversion Rights. At the option of the Holder and subject to
the terms and conditions of the Indenture, this Security (or any portion
hereof which is an integral multiple of $1,000 in principal amount) may be
surrendered for conversion into shares of Common Stock at an initial
conversion rate (the "Conversion Rate") of 20.7512 shares of Common Stock
per $1,000 principal amount of this Security. The Conversion Rate is
subject to adjustment as provided in Article XIII of the Indenture. The
right to surrender this Security for conversion pursuant to Article XIII of
the Indenture shall terminate on the close of business on December 15,
2006, or, if this Security or any portion hereof shall be called for
redemption pursuant to the terms hereof, then in respect of any portion so
called for redemption, at the close of business on the Redemption Date
(unless in the case of any such redemption the Company shall default in the
payment due upon the redemption hereof).
Except as otherwise expressly provided in the Indenture, no
payment or adjustment shall be made on account of any dividends or
distributions on Common Stock delivered upon such conversion. The
Conversion Rate will not be adjusted at any time during the term of this
Security for accrued interest. Upon conversion of this Security, (except as
provided below) that portion of accrued and unpaid interest thereon
attributable to the period from the Issue Date through the
25
<PAGE>
Conversion Date with respect to this Security shall not be canceled,
extinguished or forfeited, but rather shall be deemed to be paid in full to
the Holder thereof through the delivery of the Common Stock (together with
the cash payment in lieu of fractional interests therein) in exchange for
this Security; and the fair market value of such Common Stock (together
with any cash payment for fractional shares), if any, shall be treated as
delivered or paid, to the extent thereof, first in exchange for accrued and
unpaid interest through the Conversion Date, and the balance, if any, of
such fair market value of such Common Stock (and any cash payment for
fractional shares) shall be treated as delivered or paid in exchange for
the principal amount of this Security. Notwithstanding the foregoing,
accrued but unpaid interest will be payable upon conversion of this
Security if such conversion is made concurrently with or after acceleration
of the indebtedness represented by this Security following an Event of
Default subject to Article XII.
No fractional shares of Common Stock shall be delivered upon
exchanges but the Conversion Agent on behalf of the Company shall make a
cash payment in lieu thereof equal to the product of such fractional share
and the Sale Price on the Trading Day immediately preceding the Conversion
Date subject to Article XII.
To convert this Security the Holder must (i) complete and
manually sign the conversion notice hereon (or complete and manually sign a
facsimile of such notice) and deliver such notice to the Conversion Agent
(initially the Trustee) or, if applicable, complete and deliver to The
Depository Trust Company ("DTC") the appropriate instruction form for
conversion pursuant to DTC's book entry conversion program, (ii) surrender
(or arrange for book-entry delivery of) this Security to the Conversion
Agent (which is not necessary in the case of conversion pursuant to DTC's
book entry conversion program), (iii) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the Company or the
Trustee and (iv) pay any transfer or similar tax if required.
Book entry delivery of a Security to the Conversion Agent may be
made by any financial institution that is a participant in DTC; conversion
through DTC's book entry conversion program is available for any security
that is held in an account maintained at DTC by any such Participant. A
conversion shall be deemed to have been effected at the close of business
on the date all such requirements have been satisfied (the "Conversion
Date"). A Holder may convert a portion of this Security only if the portion
is $1,000 principal amount or an integral multiple of $1,000.
26
<PAGE>
Securities surrendered for conversion 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 Securities to be redeemed on a date within such period) must be
accompanied by payment of an amount equal to the interest thereon that the
registered Holder is to receive. Except where Securities surrendered for
conversion must be accompanied by payment as described above, no interest
on converted Securities will be payable by the Company on any Interest
Payment Date subsequent to the date of conversion.
(9) Arrangement on Call for Redemption. Any Securities called for
redemption, unless surrendered for conversion before the close of business
on the Redemption Date, may be deemed to be purchased from the Holders of
such Securities at an amount not less than the Redemption Price plus
accrued and unpaid interest to the Redemption Date, by one or more third
parties who may agree with the Company to purchase such Securities from the
Holders, to exchange them for Common Stock and to make payment for such
Securities to the Trustee in trust for such Holders.
(10) Subordination. The Securities are subordinated to Senior
Indebtedness of the Company. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid in cash before the
Securities may be paid. The Company and each Holder of Securities, by
accepting a Security, agrees to the subordination provisions contained in
the Indenture and authorizes the Trustee to give it effect and appoints the
Trustee as attorney-in-fact for such purpose.
(11) Denominations; Transfer; Exchange. The Securities are in
fully registered form, without coupons, in denominations of $1,000 of
principal amount and integral multiples of $1,000 in excess thereof. The
Holder may transfer or exchange this Security in accordance with the
Indenture. The Registrar may require the Holder, among other things, to
furnish appropriate endorsements and transfer documents. The Registrar need
not transfer or exchange any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security
not to be redeemed) or any Securities in respect of which a Change in
Control Purchase Notice has been given and not withdrawn (except, in the
case of a Security to be purchased in part, the portion of the Security not
to be purchased) or any Securities for a period of 15 days before a
selection of Securities to be redeemed.
27
<PAGE>
(12) Persons Deemed Owners. The registered Holder of this
Security may be treated as the owner of this Security for all purposes.
(13) Unclaimed Money for Securities. The Trustee and the Paying
Agent shall return to the Company upon written request any money or
securities held by them for the payment of any amount with respect to this
Security that remain unclaimed for two years. After return to the Company,
the Holder must look solely to the Company for payment.
(14) Amendment; Waiver. Subject to certain exceptions set forth
in the Indenture, (i) the Indenture or the Securities may be amended with
the written consent of the Holders of at least a majority in aggregate
principal amount of the Securities at the time Outstanding and (ii) certain
Defaults may be waived with the written consent of the Holders of a
majority in the aggregate principal amount of the Securities at the time
Outstanding. Subject to certain exceptions set forth in the Indenture,
without the consent of any Holder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect, or
inconsistency, or to comply with Article VIII or Section 13.11 of the
Indenture, to provide for uncertificated Securities in addition to or in
place of certificated Securities, to make any change that does not
adversely affect the rights of any Holder, to comply with any requirement
of the Commission in connection with the qualification of the Indenture
under the TIA or to add to the covenants or obligations of the Company
under the Indenture or surrender any right, power or option conferred by
the Indenture on the Company.
(15) Defaults and Remedies. Under the Indenture, Events of
Default include, among other things (i) default by the Company in (A)
payment of the principal amount, the Redemption Price or the Change in
Control Purchase Price, as the case may be, in respect of the Securities
when the same becomes due and payable, (B) interest when due (if such
default in payment of any such interest shall continue for 31 days) or (C)
the delivery of shares of Common Stock (including cash in lieu of
fractional shares of Common Stock) in accordance with the terms of the
Indenture when such are required to be delivered upon conversion of a
Security (if such default shall continue for 10 days); (ii) failure by the
Company to comply with any other agreements in the Indenture or the
Securities upon the receipt by the Company of notice of such default from
the Trustee or Holders of not less than 25% in aggregate principal amount
of the Securities then Outstanding and the Company's failure to cure such
default within 90 days after receipt by the Company of such notice; (iii)
default under any bond, debenture, note or other evidence of
28
<PAGE>
indebtedness for money borrowed of the Company having an aggregate
outstanding principal amount of in excess of $12,500,000, which default
shall have resulted in such indebtedness being accelerated, without such
indebtedness being discharged or such acceleration having been rescinded or
annulled within 60 days after receipt of notice thereof by the Company from
the Trustee or the Company and the Trustee from the Holders of not less
than 25% in aggregate principal amount of the Securities then Outstanding
(unless such default has been cured or waived); and (iv) certain events of
bankruptcy or insolvency. If an Event of Default occurs and is continuing,
the Trustee, or the Holders of at least 25% in aggregate principal amount
of the Securities at the time Outstanding, may by notice to the Company
declare the principal amount of, and accrued and unpaid interest through
the date of such declaration on, all the Securities to be immediately due
and payable. The Company's obligation to pay the Securities following
acceleration may be deferred under certain circumstances, if Senior
Indebtedness is outstanding. Certain events of bankruptcy or insolvency are
Events of Default which will result in the principal amount plus accrued
and unpaid interest through the occurrence of such Event of Default on the
Securities becoming due and payable immediately upon the occurrence of such
Event of Default.
Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities at the time Outstanding may direct the
Trustee in its exercise of any trust or power. The Trustee may withheld
from Holders notice of any continuing Default (except a Default in payment
of amounts specified in clause (i) above) if it in good faith determines
that withholding notice is in their interests.
(16) Registration Rights Agreement. The Holder of this Security
and the Common Stock issuable upon conversion thereof is entitled to the
benefits of a Registration Rights Agreement (subject to the provisions
thereof), dated as of December 15, 1999, among the Company and the Initial
Purchasers.
(17) Trustee Dealings with the Company. Subject to certain
limitations imposed by the TIA, the Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with and collect obligations owed to it
by the Company or its Affiliates with the same rights it would have if it
were not Trustee.
29
<PAGE>
(18) No Recourse Against Others. A director, officer, employee,
agent or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under this Security or the Indenture or
for any claim based on, in respect of or by reason of such obligations or
their creation. By accepting a Security, each Holder waives and releases
all such liability. The waiver and release are part of the consideration
for the issue of the Securities.
(19) Authentication. This Security shall not be valid until an
authorized signatory of the Trustee manually signs the Trustee's
Certificate of Authentication on the other side of this Security.
(20) Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as TEN COM (-tenants in common), TEN
ENT (-tenants by the entireties), JT TEN (-joint tenants with right of
survivorship and not as tenants in common), CUST (-custodian), and U/G/M/A
(-Uniform Gift to Minors Act).
30
<PAGE>
(21) Governing Law. THE INDENTURE AND THIS SECURITY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
Section 2.4 Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated:
------------------------
First Union National Bank, as Trustee
By:
-----------------------------------
Authorized Signatory
Section 2.5 Form of Conversion Notice.
-------------------------
CONVERSION NOTICE
To: CommScope, Inc. and First Union National Bank
The undersigned registered owner of this Security hereby
irrevocably exercises the option to convert this Security, or the portion
hereof (which is $1,000 principal amount or an integral multiple thereof),
below designated into shares of Common Stock (in the form of a Share
Certificate) in accordance with the terms of the Indenture referred to in
this Security, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for a fractional share and
any Security representing any unconverted principal amount hereof, be
issued and delivered to the registered owner hereof unless a different name
has been provided below. If shares or any portion of this Security not
converted are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith a certificate in proper form
certifying that the applicable restrictions on transfer have been complied
with. Any amount required to be paid by the undersigned on account of
interest accompanies this Security.
DATE:
----------------------
-------------------------------
Signature(s)
31
<PAGE>
(If a corporation, partnership or
fiduciary, the title of the Person
signing must be stated.)
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers,
savings and loan associations and credit unions)
with membership in an approved signature
guarantee medallion program pursuant to
Securities and Exchange Commission
Rule 17Ad-15 if shares of Common
Stock are to be issued, or Securities to be
delivered, other than to and in the name of the
registered holder.
- ------------------------------------
Signature Guarantee
Fill in for registration of shares if they are to be delivered, or
unconverted Securities if they are to be issued, other than to and in the
name of the registered holder:
- ------------------------------------
(Name)
- ------------------------------------
(Street Address)
- ------------------------------------
(City, State and zip code)
(Please print name and address)
Register: Common Stock
--
Securities
--
(Check appropriate line(s))
Principal Amount to be converted (if less than all):
32
<PAGE>
$ ,000
-----
----------------------------------
Social Security or other Taxpayer
Identification Number of owner
Section 2.6 Form of Certification.
---------------------
TRANSFER CERTIFICATE
In connection with any transfer of any of the Securities within
the period prior to the expiration of the holding period applicable to the
sales thereof under Rule 144(k) under the Securities Act of 1933, as
amended (the "Securities Act") (or any successor provision), the
undersigned registered owner of this Security hereby certifies with respect
to $________ principal amount of the above-captioned securities presented
or surrendered on the date hereof (the "Surrendered Securities") for
registration of transfer, or for exchange or conversion where the
securities issuable upon such exchange or conversion are to be registered
in a name other than that of the undersigned registered owner (each such
transaction being a "transfer"), that such transfer complies with the
restrictive legend set forth on the face of the Surrendered Securities for
the reason checked below:
[_] The transfer of the Surrendered Securities complies with
Rule 144 under the U.S. Securities Act of 1933, as amended
(the "Securities Act"); or
[_] The transfer of the Surrendered Securities complies with
Rule 144A under the Securities Act; or
[_] The transfer of the Surrendered Securities complies with
another available exemption from the registration
requirements under the Securities Act; or
[_] The transfer of the Surrendered Securities is pursuant to an
effective registration statement under the Securities Act.
33
<PAGE>
and unless the box below is checked, the undersigned confirms that, to the
undersigned's knowledge, such Securities are not being transferred to an
"affiliate" of the Company as defined in Rule 144 under the Securities Act
(an "Affiliate").
[_] The transferee is an Affiliate of the Company.
DATE:
-----------------
-------------------------------
Signature(s)
(If the registered owner is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such registered
owner must be stated.)
Section 2.7 Form of Option of Holder to Elect Purchase.
------------------------------------------
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 14.1 of the Indenture, check the following box:
[_]
If you want to elect to have only part of this Security purchased
by the Company pursuant to Section 14.1 of the Indenture, state the amount
you elect to have purchased:
$
------------------------
Dated:
-----------------
Signature:
-----------------------------
34
<PAGE>
NOTICE: The signature on this assignment must correspond with the name as
it appears upon the face of the within Security in every particular without
alteration or enlargement or any change whatsoever and be guaranteed.
Signature Guarantee:
---------------------
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers,
savings and loan associations and credit unions)
with membership in an approved signature
guarantee medallion program pursuant to
Securities and Exchange Commission
Rule 17Ad-15 if shares of Common
Stock are to be issued, or Securities to be
delivered, other than to and in the name of the
registered holder.
Section 2.8 Form of Assignment.
------------------
For value received ______________ hereby sell(s), assign(s) and
transfer(s) unto _______ (Please insert social security or Taxpayer
Identification number of assignee) the within Security, and hereby
irrevocably constitutes and appoints ___________ attorney to transfer the
said Security on the books of the Company, with full power of substitution
in the premises.
Dated:
---------------
Signature(s)
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers,
savings and loan associations and credit unions)
with membership in an approved signature
guarantee medallion program pursuant to
Securities and Exchange Commission
Rule 17Ad-15 if shares of Common
Stock are to be issued, or Securities to be
delivered, other than to and in the name of the
registered holder.
35
<PAGE>
Signature Guarantee:
--------------------
ARTICLE III
THE SECURITIES
Section 3.1 Title and Terms. The aggregate principal amount of
Securities which may be authenticated and delivered for issuance under this
Indenture is $150,000,000 upon a Company Order without any further action
by the Company (except for Securities authenticated and delivered for
exchange for, or in lieu of, other Securities pursuant to Sections 3.4,
3.5, 3.6, 9.5, 11.6, 13.2 or 14.2); provided, however, that if the Company
sells any Securities pursuant to the over-allotment option granted pursuant
to the Purchase Agreement among the Company and the Initial Purchasers
dated December 9, 1999, then the Trustee shall authenticate and deliver
Securities for issuance in an aggregate principal amount of $150,000,000
plus up to $22,500,000 aggregate principal amount upon receipt by the
Trustee of a Company Order, except as aforesaid.
The principal amount, Redemption Price, Liquidated Damages,
change in Control Purchase Price and interest on the Securities shall be
payable at the Corporate Trust Office and at any other office or agency
maintained by the Company for such purpose; provided, however, that upon
application by the Holder to the Security Registrar not later than the June
1 or December 1 immediately preceding the relevant Interest Payment Date,
such Holder may receive payment by wire transfer to a U.S. Dollar account
(such transfers to be made only to Holders of an aggregate principal amount
in excess of U.S. $5,000,000 in principal amount) maintained by the payee
with a bank in the United States upon compliance with the reasonable
regulations of the Trustee.
The Securities shall be redeemable by the Company as provided in
Article XI.
The Securities shall be subordinated in right of payment to the
prior payment in full of Senior Indebtedness as provided in Article XII.
The Securities shall be convertible as provided in Article XIII.
36
<PAGE>
The Securities shall be subject to purchase by the Company at the
option of the Holder as provided in Article XIV.
Section 3.2 Denominations. The Securities shall be issuable
only in registered form without coupons and only in denominations of $1,000
in principal amount and any integral multiple thereof.
Section 3.3 Execution, Authentication, Delivery and Dating. The
Securities shall be executed on behalf of the Company by any of its
Chairman of the Board, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon and attested by its Treasurer or one
of its Assistant Treasurers or Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may
be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of
such Securities or did not hold such offices at the date of such
Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities 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 and not otherwise. In connection with any Company Order
for authentication, an Officers' Certificate and Opinion of Counsel
pursuant to Section 1.2 shall be required.
No Security shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided
for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
Each security shall be dated the date of its authentication.
37
<PAGE>
Section 3.4 Temporary Securities. Pending the preparation of
definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of
such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to
Section 10.2, without charge to the Holder. Upon surrender for cancellation
of any one or more temporary Securities the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Securities of authorized denominations.
Until so exchanged, the temporary Securities shall in all respects be
entitled to the same benefits under this Indenture as definitive
Securities.
Section 3.5 Registration; Registration of Transfer and
Exchange. (a) The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office
and in any other office or agency designated pursuant to Section 10.2 being
herein sometimes collectively referred to as the "Security Register") in
which, subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration of Securities and of transfers
and exchanges thereof. The Trustee is hereby appointed "Security Registrar"
for the purpose of registering Securities and transfers and exchanges
thereof as herein provided. Upon surrender for registration of transfer or
exchange of any Security at an office or agency of the Company designated
pursuant to Section 10.2 for such purpose, accompanied by a written
instrument of transfer or exchange in the form provided by the Company, the
Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees (in the case of a
transfer) or to the Holder (in the case of an exchange), one or more new
Securities, of any authorized denominations and of a like aggregate
principal amount and tenor bearing such restrictive legends as may be
required by this Indenture.
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(b) Notwithstanding any other provisions of this Indenture or the
Securities, (A) transfers of a Global Security, in whole or in part, shall
be made only in accordance with Section 3.5(b)(i) and (B) transfers of a
Definitive Security shall comply with Section 3.5(b)(ii) below.
(i) Transfer of Global Security. A Global Security may not
be transferred, in whole or in part, to any Person other than the
Depositary or a nominee or any successor thereof, and no such transfer
to any such other Person may be registered. No transfer of a Security
to any Person shall be effective under this Indenture or the
Securities unless and until such Security has been registered in the
name of such Person. Nothing in this Section 3.5(b)(i) shall prohibit
or render ineffective any transfer of a beneficial interest in a
Global Security effected in accordance with the other provisions of
this Section 3.5(b).
(ii) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented to the Security Registrar with a
request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized
denominations, the Security Registrar shall register the transfer
or make the exchange as requested if its reasonable requirements
for such transaction are met;
provided, however, that the Definitive Securities surrendered for
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Company and the Security Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing; and
(ii) so long as such Securities are Restricted Securities,
such Securities are being transferred or
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exchanged pursuant to an effective registration statement under
the Securities Act or pursuant to clause (A), (B) or (C) below,
and are accompanied by the following additional information and
documents, as applicable:
(A) if such Definitive Securities are being delivered
to the Security Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such Holder to
that effect (in the form set forth in Section 2.6); or
(B) if such Definitive Securities are being transferred
to the Company, a certification to that effect; or
(C) if such Definitive Securities are being transferred
pursuant to an exemption from registration to a Qualified
Institutional Buyer in accordance with Rule 144A under the Securities
Act ("Rule 144A"), in accordance with Rule 144 or pursuant to another
available exemption under the Act, (i) a certification to that effect
(in the form set forth in Section 2.6) and (ii) if the Company or
Security Registrar so requests, an opinion of counsel or other
evidence reasonably satisfactory to them as to the compliance with the
restrictions set forth in the legend set forth in Section 2.2.
(c) Subject to the succeeding paragraph, every Security shall be
subject to the restrictions on transfer provided in the legend set forth in
the first paragraph of Section 2.2. Whenever any Restricted Security is
presented or surrendered for registration of transfer or for exchange for a
Security registered in a name other than that of the Holder, such Security
must be accompanied by a certificate in substantially the form set forth in
Section 2.6, dated the date of such surrender and signed by the Holder of
such Security, as to compliance with such restrictions on transfer. The
Security Registrar shall not be required to accept for such registration of
transfer or exchange any Security not so accompanied by a properly
completed certificate.
(d) The restrictions imposed by the legend set forth in the first
paragraph of Section 2.2 upon the transferability of any Security shall
cease and terminate when such Security has been sold pursuant to an
effective registration statement under the Securities Act or transferred in
compliance with Rule 144 under the Securities Act (or any successor
provision thereto) or, if earlier, upon the expiration of the holding
period applicable to sales thereof under Rule 144(k) under
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the Securities Act (or any successor provision). Any Security as to which
such restrictions on transfer shall have expired in accordance with their
terms or shall have terminated may, upon surrender of such Security for
exchange to the Security Registrar in accordance with the provisions of
this Section 3.5 (accompanied, in the event that such restrictions on
transfer have terminated by reason of a transfer in compliance with Rule
144 or any successor provision, by an opinion of counsel having substantial
experience in practice under the Securities Act and otherwise reasonably
acceptable to the Company, addressed to the Company and in form acceptable
to the Company, to the effect that the transfer of such Security has been
made in compliance with Rule 144 or such successor provision), be exchanged
for a new Security, of like tenor and aggregate principal amount, which
shall not bear the restrictive legend set forth in the first paragraph of
Section 2.2. If any such transfer is effected a time when a Global Security
without such restrictive legend has not yet been issued, unless an event
specified in Section 3.5(h)(1) has occurred, the Company shall issue and,
upon receipt of a Company Order in accordance with Section 3.3 hereof, the
Trustee shall authenticate one or more Global Securities, without such
restrictive legend, in an aggregate principal amount equal to the aggregate
principal amount of beneficial interests transferred pursuant to the
preceding sentence. The Company shall inform the Trustee of the effective
date of any registration statement registering the Securities under the
Securities Act. The Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the
aforementioned opinion of counsel or registration statement.
(e) As used in the preceding two paragraphs of this Section 3.5,
the term "transfer" encompasses any sale, pledge, transfer, hypothecation
or other disposition of any Security.
(f) No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of
a sum sufficient to cover any tax, assessment 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, 9.5,
11.6, 13.2 or 14.2 not involving any transfer.
(g) The Company shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of Securities
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selected for redemption under Section 11.2 and ending at the close of
business on the day of such mailing, (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in part or
(iii) to register the transfer of or exchange any Securities in respect of
which a Change of Control Purchase Notice has been given and not withdrawn
by the Holder thereof in accordance with the terms of this Indenture and
such Securities (except, in the case of Securities to be purchased in part,
the portion thereof not be purchased).
(h) The provisions of clauses (1) through (5) below shall apply
only to Global Securities:
(1) Notwithstanding any other provisions of this Indenture or the
Securities, a Global Security shall not be exchanged in whole or in part
for a Security registered in the name of any Person other than the
Depositary or one or more nominees thereof, provided that a Global Security
may be exchanged for Securities registered in the names of any person
designated by the Depositary in the event that (i) the Depositary has
notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or such Depositary has ceased to be a
"clearing agency" registered under Exchange Act, and a successor Depositary
is not appointed by the Company within 90 days or (ii) an Event of Default
has occurred and is continuing with respect to the Securities. Any Global
Security exchanged pursuant to clause (i) or (ii) above shall be so
exchanged in whole and not in part as directed by the Depositary. Any
Security issued in exchange for a Global Security or any portion thereof
shall be a Global Security; provided that any such Security so issued that
is registered in the name of a Person other than the Depositary or a
nominee thereof shall not be a Global Security.
(2) Securities issued in exchange for a Global Security shall be
issued in definitive, fully registered form, without interest coupons,
shall have an aggregate principal amount equal to that of such Global
Security to be so exchanged, shall be registered in such names and be in
such authorized denominations as the Depositary shall designate and shall
bear the applicable legends provided for herein. Any Global Security to be
exchanged in whole shall be surrendered by the Depositary to the Trustee,
as Security Registrar. Upon any such surrender, the Trustee shall
authenticate and deliver the Security issuable on such exchange to or upon
the order of the Depositary or an authorized representative thereof.
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(3) Subject to the provisions of clause (5) below, the registered
Holder may grant proxies and otherwise authorize any Person, including
Agent Members and persons that may hold interests through Agent Members, to
take any action which a holder is entitled to take under this Indenture or
the Securities.
(4) In the event of the occurrence of any of the events specified
in clause (1) above, the Company will promptly make available to the
Trustee a reasonable supply of certificated Securities in definitive, fully
registered form, without interest coupons.
(5) Neither the Agent Members nor any other Persons on whose
behalf Agent Members may act shall have any rights under this Indenture
with respect to any Global Security registered in the name of the
Depositary or any nominee thereof, or under any such Global Security, and
the Depositary or such nominee, as the case may be, may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner and holder of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished
by the Depositary or such nominee, as the case may be, or impair, as
between the Depositary, its Agent Members and any other person on whose
behalf an Agent Member may act, the operation of customary practices of
such Persons governing the exercise of the rights of a holder of any
Security.
(i) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Agent Members or beneficial owners of interests in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and
when expressly required by the terms of, this Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities.
If (i) any mutilated Security is surrendered to the Trustee, or if there
shall be delivered to the Company and the Trustee evidence to their
satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of
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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 exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Security, a new Security of like tenor and
principal amount and bearing a number not contemporaneously Outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its
discretion, but subject to any conversion rights, may, instead of issuing a
new Security, pay such Security.
Upon the issuance, authentication and delivery by the Trustee of
any new Security under this Section, the Company may require the payment of
a sum sufficient to cover any tax, assessment or other governmental charge
that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security issued, authenticated and delivered by the
Trustee pursuant to this Section in lieu of any destroyed, lost or stolen
Security shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Security shall be
at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all
other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7 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 payment
of such interest.
If the Company shall be required by law to deduct any taxes from
any sum of interest payable hereunder to a Holder, (i) the Company shall
make such deductions and shall pay the full amount deducted to the relevant
taxing authority in accordance with applicable law and (ii) the amount of
such deduction shall be treated for purposes hereof as a payment of
interest.
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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 (a "Special Record Date") for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause (1) provided.
Thereupon, the Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder at his address as it appears in the Security Register, not less than
10 days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having been
so mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Securities (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall
no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause (2),
such manner of payment shall be deemed practicable by the Trustee.
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Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such
other Security.
In the case of any Security which is converted after any Regular
Record Date and on or prior to the corresponding Interest Payment Date,
interest on such Security whose Stated Maturity is on such Interest Payment
Date shall be deemed to continue to accrue and shall be payable on such
Interest Payment Date notwithstanding such conversion and notwithstanding
that such Security may have been called for redemption on a Redemption Date
within such period, and such interest (whether or not punctually paid or
duly provided for) shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of
business on such Regular Record Date. Except as otherwise expressly
provided in the immediately preceding sentence, in the case of any Security
which is converted, interest whose Stated Maturity is after the date of
conversion of such Security shall not be payable (although such accrued and
unpaid interest will be deemed paid by the appropriate portion of the
Common Stock received by the holders upon such conversion).
Section 3.8 Persons Deemed Owners. Prior to due presentment of
a Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name such
Security is registered as the owner of such Security for the purpose of
receiving payment of principal of, premium, if any, and (subject to Section
3.7) interest on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and neither the Company nor the
Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the
Security Registrar will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial
ownership interests of a Global Security or from maintaining, supervising
or reviewing any records relating to such beneficial ownership interests
and they shall be protected in acting on any such information provided by
the Depositary.
Section 3.9 Cancellation. All Securities surrendered for
payment, redemption, registration of transfer or exchange or conversion
shall, if surrendered to
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any Person other than the Trustee, be delivered to the Trustee and shall be
promptly cancelled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange
for any Securities cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Securities held by the
Trustee shall be disposed of as directed by a Company Order; provided,
however, that the Trustee shall not be required to destroy the certificates
representing such cancelled securities.
Section 3.10 Computation of Interest. Interest on the Securities
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 the
Securities may use "CUSIP" numbers (if then generally in use), and, if so,
the Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers
printed on the Securities, and any such redemption shall not be affected by
any defect in or omission of such numbers. The Company will promptly notify
the trustee of any change in the "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, registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, on
demand of and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture,
when
(1) either
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(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section
3.6 and (ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to
the Trustee for cancellation (i) have become due and payable, (ii)
will become due and payable at their Stated Maturity within one year,
or (iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (B) above, has deposited or caused to be
deposited irrevocably with the Trustee as trust cash or, if expressly
permitted by the terms hereof, Common Stock or U.S. Government Obligations
in trust for the benefit of Holders of Outstanding Securities in an amount
sufficient to pay and discharge the entire indebtedness on such Securities
not theretofore delivered to the Trustee for cancellation, for the
aggregate principal amount thereof plus any interest due on overdue
installments and interest to the date of such deposit (in the case of
securities which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company;
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with; and
(4) no Event of Default or event which, with notice or lapse of
time, or both, would become an Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit.
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Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 6.7, the
obligations of the Trustee and, if money shall have been deposited with the
Trustee pursuant to subclause (B) of clause (1) of this Section, the
obligations of the Trustee under Section 4.2 and the last paragraph of
Section 10.3 shall survive.
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 shall be held in trust and applied by
it, in accordance with the provisions of the Securities and this Indenture,
to the payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to
the Persons entitled thereto, of the aggregate principal amount thereof
plus any interest due on overdue installments 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.
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 XII or be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest or Liquidated Damages,
if any, upon any Security when it becomes due and payable, and continuance
of such default for a period of 31 days; or
(2) the Company defaults in the payment of the principal amount,
Redemption Price or Change in Control Purchase Price on any Security, when
the same becomes due and payable at its Stated Maturity, upon redemption,
upon declaration, when due for purchase by the Company or otherwise,
whether or not such payment shall be prohibited by this Indenture;
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(3) the Company fails to comply with any of its agreements in the
Securities or this Indenture and such failure continues for 90 days after
receipt by the Company of a Notice of Default;
(4) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case or the commencement of any case
against it;
(C) consents to the appointment of a Custodian of it or
for any substantial part of its property;
(D) makes a general assignment for the benefit of its
creditors;
(E) files a petition in bankruptcy or answer or consent
seeking reorganization or relief; or
(F) consents to the filing of such petition or the
appointment of or taking possession by a Custodian;
(5) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary
case, or adjudicates the Company insolvent or bankrupt;
(B) appoints a Custodian of the Company for any
substantial part of their respective properties; or
(C) orders the winding up or liquidation of the Company
and the order or decree remains unstayed and in effect for 60 days;
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(6) the Company fails to deliver shares of Common Stock
(including cash in lieu of fractional shares) when such Common Stock (and
cash in lieu of fractional shares) is required to be delivered, upon
conversion of a Security and such failure is not remedied for a period of
10 days; or
(7) default under any bond, note or other evidence of
indebtedness for money borrowed of the Company having an aggregate
outstanding principal amount of in excess of $12,500,000, which default
shall have resulted in such indebtedness being accelerated, without such
indebtedness being discharged or such acceleration having been rescinded or
annulled within 60 days after receipt of notice thereof by the Company from
the Trustee or the Company and the Trustee from the Holders of not less
than 25% in aggregate principal amount of the Securities then Outstanding
(unless such default has been cured or waived) specifying such default and
requiring the Company to cause such indebtedness to be discharged or such
acceleration to be rescinded or annulled and stating that such notice is a
"Notice of Default" hereunder.
A Default under clause (3) above is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in
aggregate principal amount of the Securities at the time Outstanding notify
the Company and the Trustee, of the Default and the Company does not cure
such Default within the time specified in clause (3) above after receipt of
such notice. Any such notice must specify the Default, demand that it be
remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 90 days after it
becomes aware of the occurrence thereof, written notice of any event which
with the giving of notice or the lapse of time or both would become an
Event of Default under clause (3) or clause (7), its status and what action
the Company is taking or proposes to take with respect thereto.
Section 5.2 Acceleration of Stated Maturity; Rescission and
Annulment. If an Event of Default (other than an Event of Default specified
in Section 5.1(4) or 5.1(5)) occurs and is continuing, then in every such
case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities may declare the principal amount and accrued and
unpaid interest through the date of declaration on all the Securities to be
due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), and upon any such declaration such
principal amount and accrued and unpaid interest shall become
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immediately due and payable. If an Event of Default specified in Section
5.1(4) or 5.1(5) occurs, the principal amount and accrued and unpaid
interest through the date of declaration on all the Securities shall
automatically, and without any declaration or other action on the part of
the Trustee or any Holder, become immediately due and payable. Payment of
the Securities following acceleration is subject to Section 12.3.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article V provided, the
Holders of a majority in principal amount of the Outstanding Securities, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) the principal amount and accrued and unpaid
interest through the date of declaration on the Securities,
(B) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by the
Securities, and
(C) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, and actual expenses, disbursements
and advances of the Trustee, its agents and counsel; and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 5.3 Collection of Indebtedness and Suits for Enforcement
by Trustee. If
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(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 31 days, or
(2) default is made in the payment of the principal amount,
the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount then
due and payable on such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, and actual out-of-pocket
expenses, disbursements and advances, of the Trustee, its agents and
counsel.
If an Event of Default occurs and is continuing, the Trustee may
in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether
for the specific enforcement of any covenant or agreement in this Indenture
or in aid of the exercise of any power granted herein, or to enforce any
other proper remedy.
Section 5.4 Trustee May File Proofs of Claim. In case of any
judicial proceeding relative to the Company (or any other obligor upon the
Securities), its property or its creditors, the Trustee shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount owing and
unpaid in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, and
actual out-of-pocket expenses, disbursements and advances, of the Trustee,
its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(2) to collect and receive any moneys or other property payable
or deliverable on any such claim and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the
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reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 6.7.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of 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 in any
such proceeding; provided, however, that the Trustee may, on behalf of the
Holders, vote for the election of a trustee in bankruptcy or similar
official and be a member of a creditors' or other similar committee.
Section 5.5 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, and actual out-of-pocket expenses, disbursements
and advances, of the Trustee, its agents and counsel, be for the ratable
benefit of the Holders of the Securities in respect of which such judgment
has been recovered.
Section 5.6 Application of Money Collected. 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 (or premium, if any) or
interest, upon presentation of the Securities and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully
paid:
FIRST: Subject to Article XII to the payment of all amounts due
the Trustee under Section 6.7;
SECOND: To the holders of Senior Indebtedness to the extent
provided in Article XII;
THIRD: Subject to Article XII to the payment of the amounts then
due and unpaid for first, interest on, and, second, for principal
of 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,
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according to the amounts due and payable on such Securities for
interest and principal respectively; and
FOURTH: The balance, if any, 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 Securities, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
security or indemnity satisfactory to the Trustee against the costs,
expenses, losses and liabilities to be incurred in compliance with such
request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;
and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of
any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all of such Holders.
Section 5.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert. Notwithstanding any other provision in
this Indenture, the Holder of any Security shall have the right, which is
absolute and
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unconditional, to receive payment of the principal amount and accrued and
unpaid interest (subject to Sections 3.7 and 4.2) 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 Change in Control
Purchase Date, as the case may be) and to convert such Security in
accordance with Article XIII and to institute suit for the enforcement of
any such payment on or after such respective dates or the 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 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 shall be restored
severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding had been instituted.
Section 5.10 Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or 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 is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 5.11 Delay or Omission Not Waiver. No delay or omission
of the Trustee or of any Holder of any Securities 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 an
acquiescence therein. Every right and remedy given by this Article V or by
law to the Trustee or to the Holders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
Section 5.12 Control by Holders. The Holders of a majority in
principal amount of the Outstanding Securities shall have the right to
direct the time,
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method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee;
provided that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 5.13 Waiver of Past Defaults. The Holders of not less
than a majority in principal amount of the Outstanding Securities may on
behalf of the Holders of all the Securities waive any past default
hereunder and its consequences, except
(1) an Event of Default described in Section 5.1(1) or 5.1(2), or
(2) a Default in respect of a covenant or provision hereof which
under Article IX cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected, or
(3) a Default under Article XIII.
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. In any suit for the
enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as
Trustee, a court may require any party litigant in such suit to file an
undertaking to pay the costs of such suit, including reasonable attorneys'
fees and expenses, and may assess costs against any such party litigant,
having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided, that this Section 5.14 shall not be
deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Trustee and the Company or
in any suit for the enforcement of the right to convert any Security in
accordance with Article XIII.
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Section 5.15 Waiver of Usury, Stay or Extension Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE VI
THE TRUSTEE
Section 6.1 Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, 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. 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, the Trustee shall give the Holders, in
the manner provided in Section 1.6, notice of any default hereunder of
which the Trustee shall be aware, unless such default shall have been cured
or waived before the giving of such notice; provided, however, that, except
in the case of a default in any payment 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 any
Responsible Officer 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(3), no such notice to Holders shall be given until at least 30
days after the occurrence thereof.
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For the purpose of this Section, the term "default" means any event which
is, or after notice or lapse of time or both would become, an Event of
Default.
Section 6.3 Certain Rights of Trustee. Subject to the provisions
of Section 6.1:
(a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and
any resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice 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;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its
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discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to reasonable
examination of the books, records and premises of the Company, personally
or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(h) the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith, without negligence or
willful misconduct, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
indenture.
(i) the Trustee shall not be deemed to have notice of any Default
or Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact
such a default is received by the Trustee at the Corporate Trust Office of
the Trustee, and such notice references the Securities and this Indenture;
and
(j) the rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in
each of its capacities hereunder, and to each agent, custodian and other
Person employed to act hereunder.
Section 6.4 Not Responsible for Recitals or Issuance of
Securities.
-------------------------------------------
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements
of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee shall not
be accountable for the use or application by the Company of the Securities
or the proceeds thereof.
Section 6.5 May Hold Securities.
-------------------
The Trustee, any Paying Agent, any Security Registrar or any
other agent of the Company, in its individual or any other capacity, may
become the owner
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or pledgee of Securities and, subject to Sections 6.8 and 6.13, may
otherwise deal with the Company with the same rights it would have if it
were not Trustee, Paying Agent, Security Registrar, or such other agent.
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 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 actual expenses, fees, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation and the
actual out-of-pocket expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(3) to indemnify, the Trustee and any predecessor Trustee for,
and to hold it harmless against, any loss, damage, claims, liability or
expense, including taxes other than taxes based upon, measured by or
determined by the income of the Trustee, incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this trust, including the actual costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.1(4) or Section
5.1(5), the expenses (including the actual out-of-pocket charges and
expenses of its counsel) and the
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compensation for the services are intended to constitute expenses of
administration under any applicable Bankruptcy Law.
The provisions of this Section shall survive the termination of
this Indenture.
Section 6.8 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 6.9 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
and has a combined capital and surplus of at least $50,000,000 and has its
Corporate Trust Office in New York, New York. If such Person 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 Person
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 6.10 Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Trustee under Section
6.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor
Trustee 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.
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(c) The Trustee may be removed at any time by Act of the Holders
of a majority in principal amount of the Outstanding Securities, delivered
to the Trustee and to the Company. If an instrument of acceptance by a
successor Trustee 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 at the expense of the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company by Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any
cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall
be appointed by Act of the Holders of a 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, 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 and accepted appointment in the
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manner hereinafter provided, any Holder who has been a bona fide Holder of
a Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.6. Each notice shall include
the name of the successor Trustee and the address of its Corporate Trust
Office.
Section 6.11 Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute,
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;
provided, that on request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers
and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments required to more fully and
certainly vest in and confirm to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
Section 6.12 Merger, Conversion, Consolidation or Succession to
Business.
--------------------------------------------------
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of
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any paper or any further act on the part of any of the parties hereto. In
case any Securities shall have been authenticated, but not delivered, by
the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication
and deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
Section 6.13 Preferential Collection of Claims Against Company.
-------------------------------------------------
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such other obligor).
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1 Company to Furnish Trustee Names and Addresses of
Holders.
-------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not later than five Business Days immediately
preceding each Interest Payment Date in each year, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the
Holders as of the immediately preceding Regular Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list
of similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
excluding from any such list names and addresses received by the Trustee in
its capacity as Security Registrar.
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Section 7.2 Preservation of Information; Communications to
Holders.
----------------------------------------------
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and
the names and addresses of Holders received by the Trustee in its capacity
as Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided by
the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any agent of either of them shall be held accountable by
reason of any disclosure of information as to names and addresses of
Holders made pursuant to the Trust Indenture Act.
Section 7.3 Reports by Trustee.
------------------
(a) Within 60 days after May 15 of each year, commencing May 15,
2000, the Trustee shall transmit by mail to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act in the manner provided pursuant
thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange
upon which the Securities are listed, with the Commission and with the
Company. The Company will notify the Trustee when the Securities are listed
on any stock exchange and of any delisting thereof.
Section 7.4 Reports by Company.
------------------
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and
such
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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. Delivery of such reports,
information and documents to the Trustee is for informational purposes only
and the Trustee's receipt of such shall not constitute constructive notice
of any information contained therein or determinable from information
contained therein, including the Company's compliance with any of its
covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1 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 its properties and assets substantially
as an entirety to any Person, and the Company shall not permit any Person
to consolidate with or merge into the Company or convey, transfer or lease
its properties and assets substantially as an entirety to the Company,
unless:
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person that
acquires by conveyance or transfer, or that leases, the properties and
assets of the Company substantially as an entirety shall be a Person (other
than an individual) organized and validly existing under the laws of the
United States of America, any state thereof or the District of Columbia and
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form reasonably satisfactory to the Trustee,
the due and punctual payment of the principal of and any premium and
interest on all the Securities and the performance or observance of every
covenant of this Indenture on the part of the Company to be performed or
observed and shall have provided for conversion rights in accordance with
Section 13.11;
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(2) immediately after giving effect to such transaction, no Event
of Default (as defined in Article V), and no event that, after notice or
lapse of time, or both, would become an Event of Default, shall have
happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with and if a supplemental indenture is required that such
supplemental indenture constitutes the legal, valid and binding obligation
of the Company in accordance with its terms.
Section 8.2 Successor Substituted. Upon any consolidation of
the Company with, or merger of the Company into, any other Person or any
conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with Section 8.1, the successor
Person formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer or lease is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had
been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE IX
AMENDMENTS
Section 9.1 Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without the consent of
any Holder of Securities:
(1) to cure any ambiguity, omission, defect or inconsistency or
to make any other provision with respect to matters or questions arising
under the Indenture or the Securities; provided, however, that such
amendment does not materially adversely affect the rights of any Holder;
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(2) to comply with Article VIII or Section 13.11;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities so long as such uncertificated Securities
are in registered form for purposes of the Internal Revenue Code of 1986,
as amended;
(4) to make any change that does not adversely affect the rights
of any Holder;
(5) to make any change to comply with the TIA or any amendment of
the TIA, or any requirement by the Commission in connection with the
qualification of this Indenture under the TIA or any amendment thereof; or
(6) to add to the covenants or obligations of the Company
hereunder, for the benefit of the Holders, or to surrender any right, power
or option herein conferred upon the Company.
Section 9.2 With Consent of Holders. With the written consent of
the Holders of at least a majority in aggregate principal amount of the
Securities at the time Outstanding, the Company and the Trustee may amend
this Indenture or the Securities. However, without the consent of each
Holder affected, an amendment or supplement to this Indenture or the
Securities may not:
(1) reduce the principal amount of Securities whose Holders must
consent to an amendment;
(2) reduce the rate of interest referred to in paragraph 1 of the
Securities or extend the time for payment of interest on any Security;
(3) reduce the principal amount or extend the Stated Maturity of
any Security;
(4) reduce the Redemption Price or Change in Control Purchase
Price of any Security or extend the date on which the Change in Control
Purchase Price of any Security is payable;
(5) make any Security payable in money or securities other than
that stated in the Security;
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(6) make any change in Article XII that adversely affects the
rights of any Holder;
(7) make any change in Section 5.13 or this Section 9.2, except
to increase any percentage referred to therein, or make any change in
Section 5.8;
(8) make any change that adversely affects the right to convert
any Security;
(9) make any change that adversely affects the right to require
the Company to purchase the Securities in accordance with the terms thereof
and this Indenture;
(10) make any change to the provisions of this Indenture relating
to the purchase of Securities at the option of the Holder pursuant to
Section 14.1 which change would result in a violation of applicable federal
or state securities laws (including positions of the Commission under
applicable no-action letters), whether as a result of the exercise or
performance of any rights or obligations under such provisions or
otherwise; or
(11) impair the right to institute suit for the enforcement of
any payment with respect to, or conversion of, the Securities.
It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent approves the substance thereof.
An amendment under this Section 9.2 or Section 9.1 may not make
any change that adversely affects the rights under Article XII of any
holder of Senior Indebtedness then outstanding unless the requisite holders
of such Senior Indebtedness consent to such change pursuant to the terms of
such Senior Indebtedness.
After an amendment under this Section 9.2 becomes effective, the
Company shall mail to each Holder a notice briefly describing the
amendment.
Section 9.3 Compliance with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article IX shall comply
with the TIA as then in effect.
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Section 9.4 Revocation and Effect of Consents, Waivers and
Actions. Until an amendment or waiver becomes effective, a consent to it or
any other action by a Holder of a Security hereunder is a continuing
consent by the Holder and every subsequent Holder of that Security or
portion of the Security that evidences the same obligation as the
consenting Holder's Security, even if notation of the consent, waiver or
action is not made on the Security. However, any such Holder or subsequent
Holder may revoke the consent, waiver or action as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment, waiver or action becomes
effective. After an amendment, waiver or action becomes effective, it shall
bind every Holder, except as provided in Section 9.2.
Section 9.5 Notation on or Exchange of Securities. Securities
authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and shall if required by the
Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared
and executed by the Company and authenticated and delivered by the Trustee
in exchange for Outstanding Securities.
Section 9.6 Trustee to Sign Supplemental Indentures. The Trustee
shall sign any supplemental indenture authorized pursuant to this Article
IX if the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but
need not, sign it. In signing such amendment the Trustee shall be entitled
to receive, and (subject to the provisions of Section 6.3) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.
Section 9.7 Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article IX, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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ARTICLE X
COVENANTS
Section 10.1 Payment of Securities. The Company shall promptly
make all payments in respect of the Securities on the dates and in the
manner provided in the Securities or pursuant to this Indenture, including,
without limitation, Article XII herein. The principal amount, Redemption
Price, Change in Control Purchase Price and interest and Liquidated
Damages, if any, shall be considered paid on the applicable date due if on
such date the Trustee or the Paying Agent holds, in accordance with this
Indenture, cash or securities, if expressly permitted hereunder, sufficient
to pay all such amounts then due.
The Company shall, to the extent permitted by law, pay interest
on overdue amounts at the per annum rate of interest set forth in paragraph
1 of the reverse of the security, compounded semiannually, which interest
on overdue amounts (to the extent payment of such interest shall be legally
enforceable) shall accrue from the date such overdue amounts were
originally due and payable.
Section 10.2 Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York an office or
agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange,
where Securities may be surrendered for conversion and where notices and
demands to or upon the Company in respect of the Securities and this
Indenture may be served. The office or agency in the Borough of Manhattan,
the City of New York, shall initially be at the Corporate Trust Office of
the Trustee, and shall be the office or agency for all of the aforesaid
purposes unless the Company shall appoint some other office or agency for
such purposes and shall give prompt written notice to the Trustee of the
location, and any change in the location, of such other office or agency.
If at any time the Company shall fail to maintain any such required office
or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served
at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
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The Company may also from time to time designate one or more
other offices or agencies (in or outside the Borough of Manhattan, The City
of New York) where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York for such purposes.
The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such
other office or agency.
Section 10.3 Money for Security Payments To Be Held in Trust. If
the Company shall at any time act as its own Paying Agent, it will, on or
before each due date of the principal amount, Redemption Price, Change in
Control Purchase Price and interest and Liquidated Damages, if any, 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 amount,
Redemption Price, Change in Control Purchase Price and interest and
Liquidated Damages, if any, so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and will
promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal amount, Redemption Price,
Change in Control Purchase Price and interest and Liquidated Damages, if
any, on any Securities, deposit with a Paying Agent a sum sufficient to pay
such amount, such sum to be held in trust for the benefit of the Persons
entitled to such principal amount, Redemption Price, Change in Control
Purchase Price and interest and Liquidated Damages, if any, and (unless
such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this
Section 10.3, that such Paying Agent will
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
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(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal, premium, if any, or interest; and
(3) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company 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 principal amount,
Redemption Price, Change in Control Purchase Price or interest on the
Securities and remaining unclaimed for two years after such principal
amount, Redemption Price, Change in Control Purchase Price or interest has
become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company
cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that
such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the
Company.
Section 10.4 Statement by Officers as to Default. The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year
of the Company ending after the date hereof, an Officers' Certificate,
stating whether or not to the best knowledge of the signers thereof the
Company is in default in the performance and observance of any of the
terms, provisions and conditions of this
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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 shall file with the Trustee written notice of the
occurrence of any Default or Event of Default within five Business Days of
its becoming aware of such Default or Event of Default.
Section 10.5 Existence. Subject to Article VIII, the Company will
do or cause to be done all things necessary to preserve and keep in full
force and effect its existence, rights (charter and statutory) and
franchises; provided, however, that the Company shall not be required to
preserve any such right or franchise if the Board of Directors of the
Company shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 10.6 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 or the holder of shares of Common Stock issued upon
conversion thereof, the Company will promptly furnish or cause to be
furnished Rule 144A Information (as defined below) to such Holder or such
holder of shares of Common Stock issued upon conversion of Securities, or
to a prospective purchaser of any such security designated by any such
Holder or holder, as the case may be, to the extent required to permit
compliance by such Holder or holder with Rule 144A under the Securities Act
in connection with the resale of any such security. "Rule 144A Information"
shall be such information as is specified pursuant to Rule 144A(d)(4) under
the Securities Act.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1 Right to Redeem; Notices to Trustee. On or after
December 15, 2002, the Company, at its option, may redeem the Securities as
a whole at any time, or from time to time in part, for cash in accordance
with the provisions set forth in paragraphs 5 and 6 of the Securities. If
the Company elects to redeem Securities pursuant to paragraph 5 of the
Securities, it shall notify the Trustee in writing of the Redemption Date,
the principal amount of Securities to be redeemed and the Redemption Price.
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The Company shall give the notice to the Trustee provided for in
this Section 11.1 at least 35 days but not more than 60 days before the
Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee). If fewer than all the Securities are to be redeemed, the record
date relating to such redemption shall be selected by the Company and given
to the Trustee.
Section 11.2 Selection of Securities to Be Redeemed. If less than
all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed by lot, pro rata or by any other method the
Trustee selects. The Trustee shall make the selection at least 30 but not
more than 60 days before the Redemption Date from Outstanding Securities
not previously called for redemption. Securities and portions of them the
Trustee selects shall be in principal amounts of $1,000 or an integral
multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities
or portions of Securities to be redeemed.
If any Security selected for partial redemption is thereafter
surrendered for conversion 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),
solely for purposes of determining the aggregate principal amount of
Securities to be redeemed by the Company, to be the portion selected for
redemption. Securities that 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. Nothing in this Section 11.2 shall affect
the right of any Holder to convert any Security pursuant to Article XIII
before the termination of the conversion right with respect thereto.
Section 11.3 Notice of Redemption. At least 30 days but not more
than 60 days before a Redemption Date, the Trustee, in the name and at the
expense of the Company, shall cause notice of redemption to be mailed,
first-class postage prepaid, to each Holder of Securities to be redeemed at
such Holder's address as it appears on the list of Holders maintained
pursuant to Section 7.1. At the Company's written request, the Trustee
shall, in the name and at the expense of the Company, cause a similar
notice to be published at least once in a newspaper of national circulation
designated by the Company.
The notice shall identify the Securities to be redeemed and shall
state:
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(a) the Redemption Date (upon which the Redemption Price shall be
paid);
(b) the Redemption Price;
(c) the Conversion Price;
(d) the name and address of the Paying Agent and Conversion Agent
and of the office or agency referred to in Section 10.2;
(e) that Securities called for redemption may be converted at any
time before the close of business on the Redemption Date;
(f) that Holders who want to convert Securities must satisfy the
requirements set forth in paragraph 8 of the Securities;
(g) that Securities called for redemption must be surrendered to
the Paying Agent or at the office or agency referred to in Section 10.2 to
collect the Redemption Price;
(h) the CUSIP number of the Securities called for redemption;
(i) if fewer than all the Outstanding Securities are to be
redeemed, the certificate numbers and principal amounts of the particular
Securities to be redeemed; and
(j) that, unless the Company defaults in payment of the
Redemption Price, interest on Securities called for redemption will cease
to accrue on and after the Redemption Date.
Section 11.4 Effect of Notice of Redemption. Once notice of
redemption is given, Securities called for redemption become due and
payable on the Redemption Date stated in the notice and at the Redemption
Price therefor except for Securities that are converted in accordance with
the terms of this Indenture and after such date (unless the Company shall
default in the payment of the Redemption Price), such Securities shall
cease to bear interest. Upon the later of the Redemption Date and the date
such Securities are surrendered to the Paying Agent or at the office or
agency referred to in Section 10.2, such Securities called for redemption
shall be paid at the Redemption Price therefor.
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Section 11.5 Deposit of Redemption Price. Prior to 11:00 a.m.,
New York City time on the Redemption Date, the Company shall deposit with
the Paying Agent (or if the Company or a Subsidiary or an Affiliate of
either of them is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the Redemption Price of, and accrued and unpaid
interest on, all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption which prior
thereto have been delivered by the Company to the Trustee for cancellation.
The Paying Agent shall as promptly as practicable return to the Company any
money, with interest, if any, thereon not required for that purpose because
of conversion of Securities pursuant to Article XIII. If such money is then
held by the Company or a Subsidiary or an Affiliate of the Company in trust
and is not required for such purpose it shall be discharged from such
trust.
Section 11.6 Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder, a new Security of the
same tenor in an authorized denomination equal in principal amount to the
unredeemed portion of the Security surrendered.
Section 11.7 Conversion Arrangement on Call for Redemption. In
connection with any redemption of Securities, the Company may arrange, in
lieu of redemption, for the purchase and conversion of any Securities
called for redemption by an agreement with one or more investment bankers
or other purchasers to purchase all or a portion of such Securities by
paying to the Trustee in trust for the Holders whose Securities are to be
so purchased, on or before the close of business on the Redemption Date, an
amount that, together with any amounts deposited with the Trustee by the
Company for redemption of such Securities, is not less than the Redemption
Price, together with interest, if any, accrued to the Redemption Date, of
such Securities. Notwithstanding anything to the contrary contained in this
Article XI, the obligation of the Company to pay the Redemption Price of
such Securities, including all accrued interest, if any, shall be deemed to
be satisfied and discharged to the extent such amount is so paid by such
purchasers, but no such agreement shall relieve the Company of its
obligation to pay such Redemption Price and such accrued interest, if any.
If such an agreement is entered into, any Securities not duly surrendered
for conversion by the Holders thereof may, at the option of the Company, be
deemed, to the fullest extent permitted by law, acquired by such purchasers
from such Holders and (notwithstanding anything to the contrary contained
in Article XIII) surrendered by such purchasers for conversion, all as of
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immediately prior to the close of business on the Redemption Date, subject
to payment of the above amount as aforesaid. The Trustee shall hold and pay
to the Holders whose Securities are selected for redemption any such amount
paid to it for purchase and conversion in the same manner as it would
moneys 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 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
except to the extent arising from its willful misconduct or negligence.
ARTICLE XII
SUBORDINATION OF SECURITIES
Section 12.1 Securities Subordinate to Senior Indebtedness. The
Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article XII, the indebtedness
represented by the Securities and the payment of the principal amount,
Redemption Price, Liquidated Damages, Change in Control Purchase Price,
interest and all other amounts and claims owing on and with respect to each
and all of the Securities and all obligations of the Company under this
Indenture (collectively, the "Subordinated Obligations") are hereby
expressly made subordinate and junior in right of payment to the prior
payment in full in cash or other payment satisfactory to the holders of
Senior Indebtedness of all Senior Indebtedness and that said subordination
is for the benefit of the holders of Senior Indebtedness and they and or
each of them severally may enforce such subordination.
Section 12.2 Payment Over of Proceeds upon Dissolution, Etc. In
the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its
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assets, or (b) any liquidation, dissolution or other winding up of the
Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshaling of assets and liabilities of the Company,
then and in any such event the holders of Senior Indebtedness shall be
entitled to receive payment in full in cash or other payment satisfactory
to the holders of Senior Indebtedness of all amounts due or to become due
on or in respect of all Senior Indebtedness before the Holders of the
Securities are entitled to receive any payment or distribution on account
of the Subordinated Obligations, and to that end the holders of Senior
Indebtedness or their representative or representatives or the trustee or
trustees under any indenture under which any instruments evidencing any of
such Senior Indebtedness may have been issued, shall be entitled to receive
from the liquidating trustee or agent or other person making such payment
or distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee or otherwise, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Indebtedness held or represented by each,
to the extent necessary to make payment in full in cash of all Senior
Indebtedness remaining unpaid, 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
Subordinated Obligations in any such case, proceeding, dissolution,
liquidation or other winding up or event, assignment or marshalling.
The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the
Company following the conveyance or transfer of its properties and assets
substantially as an entirety to another Person upon the terms and
conditions set forth in Article VIII shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the benefit of
creditors or marshaling of assets and liabilities of the Company for the
purposes of this Section 12.2 if the Person formed by such consolidation or
into which the Company is merged or which acquires by conveyance or
transfer such properties and assets substantially as an entirety, as the
case may be, shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions set forth in Article VIII.
Section 12.3 No Payment When Senior Indebtedness in Default.
----------------------------------------------
(a) The Company may not make any payment of or distribution with
respect to the Subordinated Obligations nor may the Company acquire,
defease or redeem any Securities if (a) a payment default on any Senior
Indebtedness has
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occurred and is continuing with respect thereto (unless and until such
payment default shall have been cured or waived in writing by the holders
of such Senior Indebtedness); or (b) a default (other than a default
referred to in the preceding clause (a)) on any Senior Indebtedness occurs
and is continuing that permits holders of such Senior Indebtedness to
accelerate the maturity thereof and the default is the subject of judicial
proceedings or the Company receives a notice of default thereof from any
person who may give such notice pursuant to the instrument evidencing or
document governing such Senior Indebtedness (a "Senior Indebtedness Default
Notice"); provided, however, that only a holder of more than $10 million of
Senior Indebtedness (or a representative of holders who collectively hold
more than $10 million of Senior Indebtedness) can provide a Senior
Indebtedness Default Notice. If the Company receives a Senior Indebtedness
Default Notice, then a similar notice received within nine months
thereafter relating to the same default on the same issue of Senior
Indebtedness shall not be effective for purposes of this Section 12.3.
The Company may resume payment on the Securities and may acquire
Securities if and when (i) the default referred to in clause (a) or (b) of
the preceding paragraph above is cured or waived in writing or ceases to
exist; or (ii) in the case of a default referred to in clause (b) of the
preceding paragraph, 179 or more days pass after the receipt by the Company
of the Senior Indebtedness Default Notice; and this Article XII otherwise
permits the payment or acquisition at that time.
Nothing contained in this Article XII or elsewhere in this
Indenture or in any of the Securities shall prevent the conversion by a
Holder of any Securities into Common Stock in accordance with the
provisions for conversion of such Securities set forth in this Indenture.
(b) In the event that any Securities are declared due and payable
before their Stated Maturity pursuant to Section 5.2, then and in such
event the Company shall promptly notify holders of Senior Indebtedness of
such acceleration. The Company may not pay the Securities until the earlier
of (i) the passage of 120 or more days have passed after such acceleration
occurs or (ii) the payment in full in cash or other payment satisfactory to
the holders of Senior Indebtedness of all Senior Indebtedness, and may
thereafter pay the Securities if this Article XII permits the payment at
that time.
(c) In the event that, notwithstanding the foregoing provisions,
any payment or distribution of any kind or character, whether in cash,
property or
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securities (including, without limitation, by way of setoff or otherwise),
prohibited by this Article XII, shall be received by the Trustee or the
Holders of the Securities before all Senior Indebtedness of the Company is
paid in full in cash or other payment satisfactory to the holders of such
Senior Indebtedness of the Company, such payment or distribution shall be
held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness of the Company or their representative or
representatives, or to the trustee or trustees under any indenture pursuant
to which any instruments evidencing any Senior Indebtedness of the Company
may have been issued, as their respective interests may appear for
application to the payment of all Senior Indebtedness of the Company
remaining unpaid to the extent necessary to pay all Senior Indebtedness of
the Company in full in cash or other payment satisfactory to the holders of
such Senior Indebtedness of the Company, after giving effect to any
concurrent payment or distribution, or provision therefor, to or for the
holders of such Senior Indebtedness of the Company.
Section 12.4 Payment Permitted If No Default. Nothing contained
in this Article XII or elsewhere in this Indenture or in any of the
Securities shall prevent the Company, at any time except in the
circumstances described in Sections 12.2 and 12.3, from making payments at
any time of the principal amount, Redemption Price, Liquidated Damages,
Change in Control Purchase Price or interest, as the case may be, on the
Securities.
Section 12.5 Subrogation to Rights of Holders of Senior
Indebtedness. Subject to the payment in full of all Senior Indebtedness in
cash, and until the Securities are paid in full, the Holders of the
Securities shall be subrogated (equally and ratably with the holders of all
indebtedness of the Company which by its express terms is subordinated to
indebtedness of the Company to substantially the same extent as the
Securities are subordinated and is entitled to like rights of subrogation)
to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to
the Senior Indebtedness to the extent that payments and distributions
otherwise payable to Holders of Securities have been applied to the payment
of Senior Indebtedness as provided by this Article XII. For purposes of
such subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of
the Securities or the Trustee would be entitled, except for the provisions
of this Article XII, and no payments over pursuant to the provisions of
this Article XII to the holders of Senior Indebtedness by Holders of the
Securities or the Trustee, shall, as among the Company, its creditors other
than
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holders of Senior Indebtedness and the Holders of the Securities, be deemed
to be a payment or distribution by the Company to or on account of the
Senior Indebtedness.
Section 12.6 Provisions Solely To Define Relative Rights. The
provisions of this Article XII are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities on the one
hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article XII or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the obligation of the Company, which is absolute and
unconditional (and which, subject to the rights under this Article XII of
the holders of Senior Indebtedness, is intended to rank equally with all
other general obligations of the Company), to pay to the Holders of the
Securities the principal amount, Redemption Price, Liquidated Damages,
Change in Control Purchase Price or interest, as the case may be, on the
Securities as and when the same shall become due and payable in accordance
with their terms; or (b) affect the relative rights against the Company of
the Holders of the Securities and creditors of the Company other than the
holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture, subject to the rights, if any, under
this Article XII of the holders of Senior Indebtedness to receive cash,
property and securities otherwise payable or deliverable to the Trustee or
such Holder.
Section 12.7 Trustee To Effectuate Subordination. Each Holder of
a Security by his acceptance thereof authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article XII and appoints the
Trustee his attorney-in-fact for any and all such purposes.
Section 12.8 No Waiver of Subordination Provisions. No right of
any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by
any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof any such holder may
have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from
time to
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time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the
Securities and without impairing or releasing the subordination provided in
this Article XII or the obligations hereunder of the Holders of the
Securities to the holders of Senior Indebtedness, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the
time of payment of, or renew, exchange, increase or alter, Senior
Indebtedness, or otherwise amend, modify or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness or any security thereof or guarantee thereof is
outstanding; (ii) sell, exchange, release, surrender, realize upon, enforce
or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (iii) release any Person liable in any manner
for the collection of Senior Indebtedness; (iv) exercise or refrain from
exercising any rights against the Company and any other Person; (v) apply
any and all sums received from time to time to the Senior Indebtedness.
The provisions of this Article XII shall continue to be effective
or be reinstated as the case may be if at any time any payment of the
Senior Indebtedness is rescinded or must otherwise be returned by the
holder thereof upon the insolvency, bankruptcy or reorganization of the
Company or otherwise, all as though such payment had not been made.
Section 12.9 Notice to Trustee. The Company shall give prompt
written notice to a Responsible Officer of the Trustee of any fact known to
the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of
this Article XII or any other provision of this Indenture, the Trustee
shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment to or distribution 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 holder of Senior Indebtedness or from any trustee therefor;
and, prior to the receipt of any such written notice, the Trustee, subject
to the provisions of Section 6.1, 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 12.9 at
least two Business Days prior to the date upon which by the terms hereof
any money may become payable for any purpose, 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
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money was received and shall not be affected by any notice to the contrary
which may be received by it within two Business Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be
entitled to rely conclusively on the delivery to it of a written notice by
a Person representing himself to be a holder of Senior Indebtedness (or a
trustee therefor) to establish that such notice has been given by a holder
of Senior Indebtedness (or a trustee therefor). In the event that the
Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article XII
(although the Trustee is not obligated to make such determination), the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in
such payment or distribution and any other facts pertinent to the rights of
such Person under this Article XII, and if such evidence is not furnished,
the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Section 12.10 Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the
Company referred to in this Article XII, the Trustee, subject to the
provisions of Section 6.1, and the Holders of the Securities shall be
entitled to conclusively rely upon any order or decree entered by any court
of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding up or
similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the
benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of Securities, for
the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XII.
Section 12.11 Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness and (subject to Section 12.9 hereof)
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
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securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article XII or otherwise.
Section 12.12 Rights of Trustee as Holder of Senior
Indebtedness; Preservation of Trustee's Rights. The Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article XII with respect to any Senior Indebtedness which may at any time
be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
Nothing in this Article XII shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.7.
Section 12.13 Article Applicable to Paying Agents. In case at
any time any Paying Agent other than the Trustee shall have been appointed
by the Company and be then acting hereunder, the term "Trustee" as used in
this Article XII shall in such case (unless the context otherwise requires)
be construed as extending to and including such Paying Agent within its
meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article XII in addition to or in place of the Trustee;
provided, however, that Section 12.12 shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent.
Section 12.14 Certain Conversions Deemed Payment. For the
purposes of this Article XII only, the payment, issuance or delivery of
cash, property or securities (other than Common Stock issued in accordance
with Article XIII) upon conversion of a Security in accordance with Article
XIII shall be deemed to constitute payment on account of such Security
subject to Article XII. Nothing contained in this Article XII or elsewhere
in this Indenture or in the Securities is intended to or shall impair, as
among the Company, its creditors other than holders of Senior Indebtedness
and the Holders of the Securities, the right, which is absolute and
unconditional, of the Holder of any Security to convert such Security in
accordance with Article XIII.
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ARTICLE XIII
CONVERSION OF SECURITIES
Section 13.1 Conversion Privilege. Subject to and upon
compliance with the provisions of this Article XIII, at the option of the
Holder thereof, any Security or any portion of the principal amount thereof
which is $1,000 or an integral multiple of $1,000 may be converted at the
principal amount thereof, or of such portion thereof, into fully paid and
nonassessable shares of Common Stock of the Company (the "Conversion
Shares") at any time following the date of original issuance of Securities
at the conversion price, determined as hereinafter provided, in effect at
the time of conversion. Such conversion right shall expire at the close of
business on December 15, 2006, subject, in the case of conversion of any
global security, to any Applicable Procedures. In case a Security or
portion thereof has previously been called for redemption at the election
of the Company, such conversion right in respect of the Security or portion
so called shall expire at the close of business, New York City time, on the
Redemption Date, unless the Company defaults in making the payment due upon
redemption (in each case subject as aforesaid to any Applicable Procedures
with respect to any global security). A Security in respect of which a
Holder has delivered a Change in Control Purchase Notice (as defined in
Article XIV hereof) exercising the option of such Holder to require the
Company to purchase such Security may be converted only if such notice is
withdrawn by a written notice of withdrawal, delivered by the Holder to the
Paying Agent prior to the close of business on the Change in Control
Purchase Date, in accordance with the terms of this Indenture.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall be initially $48.19
per share of Common Stock. The Conversion Price shall be adjusted in
certain instances as provided in Section 13.4.
In case the Company shall, by dividend or otherwise, declare or
make a distribution on its Common Stock referred to in paragraph (4) or (5)
of Section 13.4 (including dividends or distributions referred to in the
last sentence of paragraph (4) of Section 13.4) which would result in an
adjustment to the Conversion Price, the Holder of each Security, upon the
conversion thereof pursuant to this Article XIII subsequent to the close of
business on the date fixed for the determination of stockholders entitled
to receive such distribution and prior to the effectiveness of the
Conversion Price adjustment in respect of such distribution pursuant to
paragraph (4)
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or (5) of Section 13.4, shall also be entitled to receive for each share of
Common Stock into which such Security is converted, the portion of the
evidences of indebtedness, shares of capital stock, securities, cash and
other property so distributed applicable to one share of Common Stock;
provided, however, that, at the election of the Company (whose election
shall be evidenced by a Board Resolution) with respect to all Holders so
converting, the Company may, in lieu of distributing to such Holder any
portion of such distribution not consisting of cash or securities of the
Company, pay such Holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution). If
any conversion of a Security described in the immediately preceding
sentence occurs prior to the payment date for a distribution to holders of
Common Stock which the Holder of the Security so converted is entitled to
receive in accordance with the immediately preceding sentence, the Company
may elect (such election to be evidenced by a Board Resolution) to
distribute to such Holder a due bill for the evidences of indebtedness,
shares of capital stock, securities, cash or assets to which such Holder is
so entitled; provided that such due bill (i) meets any applicable
requirements of the principal national securities exchange or other market
on which the Common Stock is then traded and (ii) requires payment or
delivery of such evidences of indebtedness, shares of capital stock,
securities, cash or assets no later than the date of payment or delivery
thereof to holders of Common Stock receiving such distribution.
Section 13.2 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 or assigned to the
Company or in blank, at any office or agency maintained by the Company
pursuant to Section 10.2 hereof, accompanied by (a) written notice, in
substantially the form and manner set forth in Section 2.5 hereof, to the
Company at such office or agency that the Holder elects to convert such
Security or, if less than the entire principal amount thereof is to be
converted, the portion thereof to be converted and (b) if shares or any
portion of such Security not to be converted are to be issued in the name
of a Person other than the Holder thereof, the name of the Person in which
to issue such shares.
Except as provided in Section 5.2 hereof, no Holder of Securities
will be entitled upon conversion thereof to any payment or adjustment on
account of accrued and unpaid interest thereon or on account of dividends
on the shares of Common Stock issued in connection therewith. Securities
surrendered for conversion during the period from the close of business on
any Regular Record Date
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to the opening of business on the corresponding Interest Payment Date
(except Securities called for redemption on a Redemption Date within such
period between and including such Regular Record Date and such Interest
Payment Date) must be accompanied by payment to the Company in same day
funds or other funds acceptable to the Company of an amount equal to the
interest payable on such Interest Payment Date on the principal amount
converted.
Securities shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Securities
for conversion in accordance with the foregoing provisions (the "Conversion
Date"), 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, but in any event no later
than the seventh Business Day following the Conversion Date, the Company
shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share as
provided in Section 13.3.
In the case of any Security which is converted in part only, upon
such conversion the Company shall execute and the Trustee shall
authenticate and deliver to the Holder thereof, at the expense of the
Company, a new Security or Securities of authorized denominations in
aggregate principal amount equal to the unconverted portion of the
principal amount of such Security. Any requirements for notice, surrender
or delivery of Securities pursuant to this Article XIII shall, with respect
to any global security, be subject to any Applicable Procedures.
Section 13.3 Fractions of Shares. No fractional shares of
Common Stock shall be issued upon conversion of Securities. If more than
one Security shall be surrendered for conversion at one time by the same
Holder, the number of full shares which shall be issuable upon conversion
thereof shall be computed on the basis of the aggregate principal amount of
the Securities (or specified portions thereof) so surrendered. Instead of
any fractional share of Common Stock which would otherwise be issuable upon
conversion of any Security (or specified portions thereof), the Company
shall pay a cash adjustment in respect of such fraction in an amount equal
to the same fraction of the Closing Price per share of the Common Stock at
the close of business on the Trading Day immediately preceding such day.
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"Trading Day" shall mean each day on which the primary securities
exchange or quotation system which is used to determine the Closing Price
is open for trading or quotation.
"Closing Price" of a single share of Common Stock on any Trading
Day shall mean the closing per share sale price for the Common Stock (or if
no closing sale price is reported, the average of the bid and ask prices
or, if more than one in either case, the average of the average bid prices
and the average ask prices) on such Trading Day as reported in composite
transactions for the principal United States securities exchange on which
the Common Stock is traded or, if the Common Stock is not listed on a
United States national or regional stock exchange, as reported by the
National Association of Securities Dealers Automated Quotation System. If
on the Conversion Date, the Common Stock is not quoted by any such
organization, the fair market value of such Common Stock on such day, as
reasonably determined in good faith by the Board of Directors of the
Company, shall be used.
Section 13.4 Adjustment of Conversion Price. (1) In case the
Company shall pay or make a dividend or other distribution on its Common
Stock exclusively in Common Stock, the Conversion Price in effect at the
opening of business on the day next following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the number of shares of Common
Stock 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 on the outstanding shares of such class of Common Stock, such
reduction to become effective immediately after the opening of business on
the day next following the date fixed for such determination. For the
purposes of this paragraph (1), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company shall
not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.
(2) In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall
otherwise issue to all holders of its Common Stock, rights, warrants or
options entitling the holders thereof, for a period not exceeding 45 days,
to subscribe for or purchase shares of Common Stock at a price per share
less than the current market price per share
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(determined as provided in paragraph (7) of this Section 13.4) of the
Common Stock on the date fixed for the determination of stockholders
entitled to receive such rights, warrants or options, the Conversion Price
in effect at the opening of business on the day following the date fixed
for such determination shall be reduced by multiplying such Conversion
Price by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock so offered for
subscription or purchase, such reduction to become effective immediately
after the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (2), the number of shares
of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock.
The Company shall not issue any rights, warrants or options in respect of
shares of Common Stock held in the treasury of the Company. Notwithstanding
the foregoing, in case the Company shall issue rights, options or warrants
("Stockholder Rights") to all holders of its Common Stock entitling the
holders thereof to subscribe for or purchase shares of Common Stock, which
rights or warrants (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, in each case in clauses (i) through
(iii) until the occurrence of a specified event or event ("Trigger Event"),
such Stockholder Rights shall for purposes of this Section 13.4 not be
deemed issued or distributed until the occurrence of the earliest Trigger
Event and the conversion price shall not be reduced until the occurrence of
such earliest Trigger Event. If at the end of the period during which all
such warrants, options or rights are exercisable, not all such warrants,
options or rights shall have been exercised, the conversion price shall be
immediately readjusted to what it would have been had the above fraction
been computed based on the number of shares of Common Stock actually issued
in respect of such warrants, options or rights, as the case may be.
(3) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day
upon which such subdivision becomes effective shall be proportionately
reduced by multiplying such conversion price by a fraction of which the
numerator shall be the number of shares
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of Common Stock outstanding at the close of business on the day upon which
such subdivision becomes effective before giving effect to such subdivision
and the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the day such subdivision becomes
effective after giving effect to such subdivision, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased by
multiplying such conversion price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the day upon which such combination becomes effective before
giving effect to such combination and the denominator shall be the number
of shares of Common Stock outstanding at the close of business on the day
such combination becomes effective after giving effect to such combination
such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(4) Subject to the last sentence of this paragraph (4), in case
the Company shall, by dividend or otherwise, distribute to all holders of
its Common Stock evidences of its indebtedness, shares of any class of
capital stock, securities, cash or property (excluding any rights,
warrants, options or Stockholder Rights referred to in paragraph (2) of
this Section 13.4, any dividend or distribution paid exclusively in cash
and any dividend or distribution referred to in paragraph (1) of this
Section 13.4), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this paragraph (4) by a fraction of which the numerator
shall be the current market price per share (determined as provided in
paragraph (7) of this Section 13.4) of the Common Stock on the date of such
effectiveness less the fair market value (as determined in good faith by
the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution), on the date of such effectiveness, of the
portion of the evidences of indebtedness, shares of capital stock,
securities, cash and property so distributed applicable to one share of
Common Stock and the denominator shall be such current market price per
share of the Common Stock, such reduction to become effective immediately
prior to the opening of business on the day next following the later of (a)
the date fixed for the payment of such distribution and (b) the date 20
days after the notice relating to such distribution is given pursuant to
Section 13.6(a) (such later date of (a) and (b) being referred to as the
"Reference Date"). If the Board of Directors determines the fair market
value of any distribution
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for purposes of this paragraph (4) by reference to the actual or when
issued trading market for any securities comprising such distribution, it
must in doing so consider, among any other facts or advice it deems
relevant, the prices in such market over the same period used in computing
the current market price per share pursuant to paragraph (7) of this
Section. For purposes of this paragraph (4), any dividend or distribution
that includes shares of Common Stock or rights, warrants or options to
subscribe for or purchase shares of Common Stock shall be deemed instead to
be (a) a dividend or distribution of the evidences of indebtedness, cash,
property, shares of capital stock or securities other than such shares of
Common Stock or such rights, warrants or options (making any Conversion
Price reduction required by this paragraph (4)) immediately followed by (b)
a dividend or distribution of such shares of Common Stock or such rights
(making any further Conversion Price reduction required by paragraph (1) or
(2) of this Section 13.4, except (i) the Reference Date of such dividend or
distribution as defined in this paragraph (4) shall be substituted as "the
date fixed for the determination of stockholders entitled to receive such
dividend or other distributions", "the date fixed for the determination of
stockholders entitled to receive such rights, warrants or options" and "the
date fixed for such determination" within the meaning of paragraphs (1) and
(2) of this Section 13.4 and (ii) any shares of Common Stock included in
such dividend or distribution shall not be deemed "outstanding at the close
of business on the date fixed for such determination" within the meaning of
paragraph (1) of this Section 13.4).
(5) In case the Company shall, by dividend or otherwise, make a
distribution to all holders of its Common Stock exclusively in cash in an
aggregate amount that, together with (i) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash
within the 12 months preceding the date of payment of such distribution and
in respect of which no Conversion Price adjustment pursuant to this
paragraph (5) has been made and (ii) the aggregate of any cash plus the
fair market value (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of the tender or exchange offer referred
to below, of consideration payable in respect of any tender or exchange
offer by the Company or a Subsidiary for all or any portion of the Common
Stock concluded within the 12 months preceding the date of payment of such
distribution and in respect of which no Conversion Price adjustment
pursuant to paragraph (6) of this Section 13.4 has been made, exceeds 10%
of the product of the current market price per share (determined as
provided in paragraph (7) of this Section 13.4) of the Common Stock as of
the Trading Day immediately preceding the record date fixed for
stockholders entitled to receive such distribution times the number of
shares of
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Common Stock outstanding on such record date, the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying
the Conversion Price in effect immediately prior to the effectiveness of
the Conversion Price reduction contemplated by this paragraph (5) by a
fraction of which the numerator shall be the current market price per share
(determined as provided in paragraph (7) of this Section 13.4) of the
Common Stock on the date of such effectiveness less an amount equal to the
quotient of (x) the excess of such combined amount over such 10% and (y)
the number of shares of Common Stock outstanding on the record date and
(ii) the denominator of which shall be equal to the current market price on
such record date, such reduction to become effective immediately prior to
the opening of business on the later of (a) the day following the record
date fixed for the payment of such distribution and (b) the date 20 days
after the notice relating to such distribution is given pursuant to Section
13.6(a).
(6) In case a successful tender or exchange offer made by the
Company or any Subsidiary for all or any portion of the Common Stock shall
involve an aggregate consideration having a fair market value (as
determined in good faith by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution) at the last time
(the "Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as it may be amended) that, together with (i) the
aggregate of the cash plus the fair market value (as determined in good
faith by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution), as of the expiration of the other
tender or exchange offer referred to below, of consideration payable in
respect of any other tender or exchange offer by the Company or a
Subsidiary for all or any portion of the Common Stock concluded within the
preceding 12 months and in respect of which no Conversion Price adjustment
pursuant to this paragraph (6) has been made and (ii) the aggregate amount
of any distributions to all holders of the Common Stock made exclusively in
cash within the preceding 12 months and in respect of which no Conversion
Price adjustment pursuant to paragraph (5) of this Section 13.4 has been
made, exceeds 10% of the product of the current market price per share
(determined as provided in paragraph (7) of this Section 13.4) of the
Common Stock on the Expiration Time times the number of shares of Common
Stock outstanding (including any tendered shares) on the Expiration Time,
the Conversion Price shall be reduced (but not increased) so that the same
shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the Expiration Time by a fraction of which the
numerator shall be (i) the product of the current market price per share
(determined as provided in paragraph (7) of this Section 13.4) of the
Common Stock on the Trading Day next succeeding the Expiration Time times
the
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number of shares of Common Stock outstanding (including any tendered or
exchanged shares) at the Expiration Time minus (ii) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the
terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased
Shares") and the denominator shall be the product of (i) such current
market price per share on the Trading Day next succeeding the Expiration
Time times (ii) such number of outstanding shares at the Expiration Time
(including any tendered shares) less the number of Purchased Shares, such
reduction to become effective immediately prior to the opening of business
on the day following the Expiration Time; provided, that if the number of
Purchased Shares or the aggregate consideration payable therefor have not
been finally determined by such opening of business, the adjustment
required by this subsection (6) shall, pending such final determination, be
made based upon the number of Purchased Shares and the aggregate
consideration payable therefor as so finally determined, effectively
immediately prior to the opening of business on the day immediately
following the day such final determination shall have been made.
(7) For the purpose of any computation under this paragraph and
paragraphs (2), (4) and (5) of this Section 13.4, the current market price
per share of Common Stock on any date in question shall be deemed to be the
average of the daily Closing Prices for the 10 consecutive Trading Days
immediately preceding the date in question; provided, however, that (i) if
the "ex" date (as hereinafter defined) for any event (other than the
issuance or distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to paragraph (1), (2), (3),
(4), (5) or (6) above ("Other Event") occurs on or after the 10th Trading
Day prior to the date in question and prior to the "ex" date for the
issuance or distribution requiring such computation (the "Current Event"),
the Closing Price for each Trading Day prior to the "ex" date for such
Other Event shall be adjusted by multiplying such Closing Price by the same
fraction by which the Conversion Price is so required to be adjusted as a
result of such Other Event, (ii) if the "ex" date for any Other Event
occurs after the "ex" date for the Current Event and on or prior to the
date in question, the Closing Price for each Trading Day on and after the
"ex" date for Other Event shall be adjusted by multiplying such Closing
Price by the reciprocal of the fraction by which the Conversion Price is so
required to be adjusted as a result of such Other Event, (iii) if the "ex"
date for any Other Event occurs on the "ex" date for the Current Event, one
of those events shall be deemed for purposes of clauses (i) and (ii) of
this proviso to have an "ex"date occurring prior to the "ex" date for the
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Other Event, and (iv) if the "ex" date for the Current Event is on or prior
to the date in question, after taking into account any adjustment required
pursuant to clause (ii) of this proviso, the Closing Price for each Trading
Day on or after such "ex" date shall be adjusted by adding thereto the
amount of any cash and the fair market value on the date in question (as
determined in good faith by the Board of Directors in a manner consistent
with any determination of such value for purposes of paragraph (4) or (5)
of this Section 13.4, whose determination shall be conclusive and described
in a Board Resolution) of the portion of the rights, warrants, options,
evidences of indebtedness, shares of capital Stock, securities, cash or
property being distributed applicable to one share of Common Stock. For the
purpose of any computation under paragraph (6) of this Section 13.4, the
current market price per share of Common Stock on any date in question
shall be deemed to be the average of the daily Closing Prices for the 10
consecutive Trading Days commencing on or after the latest (the
"Commencement Date") of (i) the date 10 Trading Days before the date in
question, (ii) the date of commencement of the tender or exchange offer
requiring such computation and (iii) the date of the last amendment, if
any, of such tender or exchange offer involving a change in the maximum
number of shares for which tenders are sought or a change in the
consideration offered, and ending not later than the Trading Day next
succeeding the Expiration Time of such tender or exchange offer (or, if
such Expiration Time occurs before the close of trading on a Trading Day,
not later than the Trading Day during which the Expiration Time occurs);
provided, however, that if the "ex" date for any Other Event (other than
the tender or exchange offer requiring such computation) occurs on or after
the Commencement Date and on or prior to the Trading Day next succeeding
the Expiration Time for the tender or exchange offer requiring such
computation, the Closing Price for each Trading Day prior to the "ex" date
for such Other Event shall be adjusted by multiplying such Closing Price by
the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event. For purposes of this paragraph,
the term "ex" date, (i) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular
way on the relevant exchange or in the relevant market from which the
Closing Price was obtained without the right to receive such issuance or
distribution, (ii) when used with respect to any subdivision or combination
of shares of Common Stock, means the first date on which the Common Stock
trades regular way on such exchange or in such market after the time at
which such subdivision or combination becomes effective, and (iii) when
used with respect to any tender or exchange offer means the first date on
which the Common Stock trades regular way on such exchange or in such
market after the Expiration Time of such tender or exchange offer.
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(8) In addition to the foregoing adjustments in paragraphs (1),
(2), (3), (4), (5) and (6) above, the Company, from time to time and to the
extent permitted by law, may reduce the Conversion Price by any amount for
at least 20 Business Days, if the Board of Directors has made a
determination, which determination shall be conclusive, that such reduction
would be in the best interests of the Company. The Company shall give
notice to the Trustee and cause notice of such reduction to be mailed to
each Holder of Securities at such Holder's address as the same appears on
the registry books of the Registrar, at least 15 days prior to the date on
which such reduction commences. The Company may, at its option, also make
such reductions in the Conversion Price in addition to those set forth
above, as the Board of Directors deems advisable to avoid or diminish any
income tax to holders of shares of Common Stock resulting from any dividend
or distribution of stock (or rights to acquire stock) or from any event
treated as such for United States federal income tax purposes.
(9) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1%
in the Conversion Price; provided, however, that any adjustments which by
reason of this paragraph (9) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
(10) In the event that the Company distributes assets, debt
securities, rights, warrants or options (other than those referred to in
paragraph (2) above) pro rata to holders of Common Stock, and the fair
market value of the portion of assets, debt securities, rights, warrants or
options applicable to one share of Common Stock distributed to holders of
Common Stock exceeds the Average Sale Price (as defined below) per share of
Common Stock, or such Average Sale Price exceeds such fair market value by
less than $1.00, then so long as any such assets, debt securities, rights,
options or warrants have not expired or been redeemed by the Company, the
Company shall make proper provision so that the Holder of any Security upon
conversion, rather than being entitled to an adjustment in the Conversion
Price, will be entitled to receive upon such conversion, in addition to the
Conversion Shares, a number of assets, debt securities, rights, warrants
and options to be determined as follows: (i) if such conversion occurs on
or prior to the date for the distribution to the holders of assets, debt
securities, rights, warrants or options of separate certificates evidencing
such assets, debt securities, rights, warrants or options (the
"Distribution Date"), the same number of assets, debt securities, rights,
warrants or options to which a holder of a number of shares of Common Stock
equal to the number of Conversion Shares is entitled at the time of such
conversion in
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accordance with the terms and provisions of and applicable to the assets,
debt securities, rights, warrants or options being distributed, and (ii) if
such conversion occurs after such Distribution Date, the same number of
assets, debt securities, rights, warrants or options to which a holder of
the number of shares of Common Stock into which the principal amount of
such Security so converted was convertible immediately prior to such
Distribution Date would have been entitled on such Distribution Date in
accordance with the terms and provisions of and applicable to the assets,
debt securities, rights, warrants or options.
"Average Sale Price" means the average of the Closing Prices of
the Common Stock for the shorter of (i) 30 consecutive Trading Days ending
on the last full Trading Day prior to the Time of Determination (as defined
below) with respect to the rights, options, warrants or distribution in
respect of which the Average Sale Price is being calculated, or (ii) the
period (x) commencing on the date next succeeding the first public
announcement of (a) the issuance of rights, options or warrants or (b) the
distribution, in each case, in respect of which the Average Sale Price is
being calculated and (y) proceeding through the last full Trading Day prior
to the Time of Determination with respect to the rights, options, warrants
or distribution in respect of which the Average Sale Price is being
calculated, or (iii) the period, if any, (x) commencing on the date next
succeeding the Ex-Dividend Time (as defined below) with respect to the next
preceding (a) issuance of rights, warrants or options or (b) distribution,
in each case, for which an adjustment is required by the provisions of
Section 13.4(2) or (10) and (y) proceeding through the last full Trading
Day prior to the Time of Determination with respect to the rights, options,
warrants, or distribution in respect of which the Average Sale Price is
being calculated. If the Ex-Dividend Time (or in the case of a subdivision,
combination or reclassification, the effective date with respect thereto)
with respect to a dividend, subdivision, combination or reclassification to
which Section 13.4(1) or (3) applies occurs during the period applicable
for calculating "Average Sale Price" pursuant to the definition in the
preceding sentence, "Average Sale Price" shall be calculated for such
period in a manner determined in good faith by the Board of Directors to
reflect the impact of such dividend, subdivision, combination or
reclassification on the Closing Price of the Common Stock during such
period.
"Time of Determination" means the time and date of the earlier of
(i) the determination of stockholders entitled to receive rights, warrants
or options or a distribution, in each case, to which this Section 13.4(10)
applies and (ii) the time ("Ex-Dividend Time") immediately prior to the
commencement of "ex-dividend" trading for such rights, options, warrants or
distribution on the New York Stock
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Exchange or such other national or regional exchange or market on which the
shares of Common Stock are listed or quoted.
(11) Notwithstanding the foregoing provisions, (i) no adjustment
need be made for a transaction to which any of the adjustment provisions
described above applies if Holders may participate in the transaction on a
basis and with notice that the Board of Directors determines to be the fair
and appropriate in light of the basis and notice on which holders of Common
Stock participate in the transaction, and (ii) the issuance of any shares
of Common Stock pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the Company and the
investment of additional optional amounts in shares of Common Stock under
any such plan, and the issuance of any shares of Common Stock or options or
rights to purchase such shares pursuant to any employee benefit plan or
program of the Company or pursuant to any option, warrant, right or
exercisable, exchangeable or convertible Security outstanding as of the
date the Securities were first issued, shall not be deemed to constitute an
issuance of Common Stock or exercisable, exchangeable or convertible
securities by the Company to which any of the adjustment provisions
described above applies.
(12) Notwithstanding any other provision of this Article XIII, no
adjustment to the conversion price shall result in zero or in a negative
number or shall reduce the conversion price below the then par value per
share of the Common Stock, and any such purported adjustment shall instead
reduce the conversion price to such par value. The Company hereby covenants
not to take any action to increase the par value per share of the Common
Stock.
(13) No adjustment in the Conversion Price shall be required for
any increase or decrease in the par value of the Common Stock.
Section 13.5 Notice of Adjustments of Conversion Price.
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price in
accordance with Section 13.4 and shall prepare a certificate signed by the
Chief Financial Officer of the Company setting forth the adjusted
Conversion Price and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed (with a
copy to the Trustee) at each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 10.2 hereof; and
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(b) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall forthwith be
required, and as soon as practicable after it is required, such notice
shall be mailed by the Company to all Holders at their last addresses as
they shall appear in the Security Register.
Section 13.6 Notice of Certain Corporate Action. In case:
----------------------------------
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require a Conversion Price
adjustment pursuant to paragraph (5) of Section 13.4; or
(b) the Company shall authorize the granting to all holders of
its Common Stock of rights, warrants or options to subscribe for or
purchase any shares of capital Stock of any class or of any other rights
(excluding rights distributed pursuant to any stockholder rights plan); or
(c) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding, up of the Company; or
(e) the Company or any Subsidiary of the Company shall commence a
tender or exchange offer for all or a portion of the Company's outstanding
shares of Common Stock (or shall amend any such tender or exchange offer);
then the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of Securities pursuant to Section
10.2 hereof, and shall cause to be mailed to all Holders at their last
addresses as they shall appear in the Security Register, at least 20 days
(or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record, effective or expiration date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution or granting of rights, warrants or
options, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be
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entitled to such dividend, distribution, rights, warrants or options are to
be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding
up is expected to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up, or (z) the date on which such
tender offer commenced, the date on which such tender offer is scheduled to
expire unless extended, the consideration offered and the other material
terms thereof (or the material terms of any amendment thereto).
Section 13.7 Company's Obligation Regarding Common Stock. The
Company shall at all times reserve and keep available, free from preemptive
rights, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of Securities, the whole number of
shares of Common Stock then issuable upon the conversion in full of all
outstanding Securities.
Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value, if any, of the shares of
Common Stock issuable upon conversion of the Securities, the Company will
take all corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue shares of
such Common Stock at such adjusted Conversion Price.
The Company covenants that if any shares of Common Stock to be
provided for the purpose of conversion of Securities hereunder require
registration with or approval of any governmental authority under any
federal or state law before such shares may be validly issued upon
conversion, the Company will in good faith and as expeditiously as
practicable endeavor to secure such registration or approval, as the case
may be.
The Company further covenants that so long as the Common Stock
shall be listed or quoted on the New York Stock Exchange, the Nasdaq
National Market, or any other national securities exchange the Company
will, if permitted by the rules of such exchange, list and keep listed so
long as the Common Stock shall be so listed on such market or exchange, all
Common Stock issuable upon conversion of the Securities.
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Section 13.8 Taxes on Conversions. The Company will pay any and
all taxes that may be payable in respect of the issue or delivery of shares
of Common Stock on conversion of Securities pursuant hereto. The Company
shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that of the Holder of the Security or
Securities to be converted, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to the Company
the amount of any such tax, or has established to the satisfaction of the
Company that such tax has been paid.
Section 13.9 Covenant as to Common Stock. The Company covenants
that all shares of Common Stock which may be issued upon conversion of
Securities shall upon issue be newly issued (and not treasury shares) and
be duly authorized, validly issued, fully paid and nonassessable and,
except as provided in Section 13.13, the Company shall pay all taxes, liens
and charges with respect to the issue thereof.
Section 13.10 Cancellation of Converted Securities. All
Securities delivered for conversion shall be delivered to the Trustee to be
cancelled by or at the direction of the Trustee, which shall dispose of the
same as provided in Section 3.9 hereof.
Section 13.11 Provisions in Case of Reclassification,
Consolidation, Merger or Sale of Assets. In the event that the Company
shall be a party to any transaction (including any (i) recapitalization or
reclassification of the Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination of the Common Stock), (ii) any
consolidation of the Company with, or merger of the Company into, any other
person, any merger of another person into the Company (other than a merger
which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company), (iii)
any sale or transfer of all or substantially all of the assets of the
Company or (iv) any compulsory share exchange) pursuant to which the Common
Stock is converted into the right to receive other securities, cash or
other property, then lawful provision shall be made as part of the terms of
such transaction whereby the Holder of each Security then Outstanding shall
have the right thereafter to convert such Security only into (subject to
funds being legally available for such purpose under applicable law at the
time of such conversion) the kind and amount of securities, cash and other
property receivable upon such transaction by a holder of the number of
shares of
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Common Stock into which such Security might have been converted immediately
prior to such transaction. The Company or the person formed by such
consolidation or resulting from such merger or which acquired such assets
or which acquired the Company's shares of Common Stock, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture
establishing such rights. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Article. The above provisions of
this Section 13.11 shall similarly apply to successive transactions of the
foregoing type.
Section 13.12 Company's Obligation. All calculations,
adjustments, conversions and other determinations under this Article 13
shall be the sole responsibility and obligation of the Company. The Trustee
(a) shall have no obligation to review, challenge or contest any such
calculation, adjustment, conversion or other determination and (b) shall
not be liable for any default or error by the Company under this Article
13.
Section 13.13 Restrictions on Common Stock Issuable Upon
Conversion.
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(1) Shares of Common Stock to be issued upon conversion of a
Security in respect of restricted Securities shall bear such restrictive
legends as the Company may provide in accordance with applicable law.
(2) If shares of Common Stock to be issued upon conversion of a
Security in respect of restricted Securities are to be registered in a name
other than that of the Holder of such Security, then the Person in whose
name such shares of Common Stock are to be registered must deliver to the
Conversion Agent a certificate satisfactory to the Company and signed by
such Person, as to compliance with the restrictions on transfer applicable
to such Security. Neither the Trustee nor any Conversion Agent or Registrar
shall be required to register in a name other than that of the Holder
shares of Common Stock or such Securities issued upon conversion of any
such Security in respect of such Securities not so accompanied by a
properly completed certificate.
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ARTICLE XIV
RIGHT TO REQUIRE REPURCHASE
Section 14.1 Purchase of Securities at Option of the Holder upon
Change in Control. In the event that a Change in Control shall occur, each
Holder shall have the right, at the Holder's option, to require the Company
to repurchase (subject to the provisions of Section 12.3 hereof), and upon
the exercise of such right the Company shall repurchase, all of such
Holder's Securities, or any portion of the principal amount thereof that is
an integral multiple of $1,000 (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 $1,000 or an
integral multiple of $1,000), on the date (the "Change in Control Purchase
Date") that is not later than 45 Business Days after the date of the
occurrence of a Change in Control for cash at a purchase price equal to
100% of the principal amount plus interest accrued and unpaid to (but
excluding) the Change in Control Purchase Date (subject to the right of
Holders of record on the Regular Record Date to receive interest on the
relevant Interest Payment Date) (the "Change in Control Purchase Price").
If the Change in Control Purchase Date is between a Regular Record Date and
the related Interest Payment Date, then the interest payable on such
Interest Payment Date shall be paid to the Holder of record of the Security
on such Regular Record Date.
Section 14.2 Notices; Method of Exercising Repurchase Right,
Etc.
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(a) Unless the Company shall have theretofore called for
redemption all of the outstanding Securities, on or before the 25th day
after the occurrence of a Change in Control, the Company or, at the written
request of the Company, on or before the tenth (10th) day after receipt of
such request, the Trustee, at the Company's expense, shall give notice to
all Holders of Securities (the "Company Notice") of the occurrence of the
Change in Control and of the repurchase right set forth herein arising as a
result thereof. If the Company gives such notice of a repurchase right, the
Company shall also deliver a copy of such notice of a repurchase right to
the Trustee.
Each Company Notice shall state:
(1) the date of such Change in Control and, briefly, the events
causing such Change in Control;
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(2) the date by which the Change in Control Purchase Notice (as
defined below) must be delivered;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) the place or places where such Securities are to be
surrendered for payment of the Change in Control Purchase Price and accrued
interest, if any;
(6) the Conversion Price and any adjustments thereto, the date on
which the right to convert the Securities will terminate and the places
where such Securities may be surrendered for conversion;
(7) a description of the procedure which a Holder must follow to
exercise a repurchase right;
(8) the procedures for withdrawing a Change in Control Purchase
Notice;
(9) that Holders who want to convert Securities must satisfy the
requirements set forth in the Securities; and
(10) briefly, the conversion rights of Holders of Securities.
No failure of the Company to give the foregoing notice 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.
(b) To exercise a repurchase right, a Holder shall deliver to the
Paying Agent or an office or agency maintained by the Company for such
purpose in the Borough of Manhattan, The City of New York, prior to the
close of business on or before the Change in Control Purchase Date written
notice of the Holder's exercise of such right (the "Change in Control
Purchase Notice"), which notice shall set forth (i) the name of the Holder,
(ii) the certificate numbers of the Securities with respect to which the
repurchase right is being exercised, (iii) the principal amount of the
Securities to be repurchased (and, if any Security is to be repurchased in
part, 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
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registered) and (iv) a statement that an election to exercise the
repurchase right is being made thereby pursuant to the applicable
provisions of the Securities.
(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be paid
to the Paying Agent the Change in Control Purchase Price in cash, for
payment to the Holder on the Change in Control Purchase Date, payable with
respect to the Securities (or portion thereof) as to which the repurchase
right has been exercised; provided, however, that such Security for which a
repurchase right has been exercised has been delivered to the Paying Agent
(together with all necessary endorsements) at any time after the notice of
exercise of a repurchase right shall have been given. Payment of the Change
in Control Purchase Price for such Security shall be made promptly
following the later of the Business Day following the Change in Control
Purchase Date and time of delivery of the Security. If the Paying Agent
holds money sufficient to pay the Change in Control Purchase Price on the
Business Day following the Change in Control Purchase Date, then,
immediately after the Change in Control Purchase Date, such Security shall
cease to be outstanding and interest will cease to accrue and will be
deemed paid regardless of whether such Security has been delivered to the
Paying Agent, and all other rights of the Holder shall terminate (other
than the right of such Holder to receive the Change in Control Purchase
Price upon delivery of such Security). Securities in respect of which a
Change in Control Purchase Notice has been given by the Holder thereof may
not be converted into shares of Common Stock on or after the date of the
delivery of such Change in Control Purchase Notice, unless such Change in
Control Purchase Notice has first been validly withdrawn as specified in
Section 14.2(g).
(d) On or prior to the Change in Control Purchase Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 6.6 hereof) an amount of money sufficient to pay the
Change in Control Purchase Price of the Securities which are to be repaid
on the Change in Control Purchase Date.
(e) If any Security (or portion thereof) surrendered for
repurchase shall not be so paid on the Business Day following the Change in
Control Purchase Date, the principal amount of such Security (or portion
thereof, as the case may be) shall, until paid, bear interest from the
Change in Control Purchase Date at the rate of 4% per annum, and each
Security shall remain convertible into Common Stock in
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accordance with Article XIII herein until the principal of such Security
(or portion thereof, as the case may be) shall have been paid or duly
provided for.
(f) 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 deliver 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
portion of the principal of the Security so surrendered that was not
repurchased.
(g) Any Holder that has delivered to the Trustee a Change in
Control Purchase Notice shall have the right to withdraw such notice at any
time prior to the close of business on the Change in Control Purchase Date
by delivery of a written notice of withdrawal to the Paying Agent prior to
the close of business on such date. The notice of withdrawal shall state
the principal amount and the certificate numbers of the Securities as to
which the withdrawal notice relates and the principal amount, if any, which
remains subject to the notice of exercise of a repurchase right. A Security
in respect of which a Holder has exercised its option to require repurchase
upon a Change in Control may thereafter be converted into Common Stock only
if such Holder withdraws its notice in accordance with the preceding
sentence.
(h) There shall be no purchase of any Securities pursuant to
Section 14.1 if there has occurred (or on or after the giving, by the
Holders of such Securities, of the required Change in Control Purchase
Notice) and is continuing an Event of Default (other than a default in the
payment of the Change in Control Purchase Price with respect to such
Securities). The Paying Agent will promptly return to the respective
Holders thereof any Securities (x) with respect to which a Change in
Control Purchase Notice has been withdrawn in compliance with this
Indenture, or (y) held by it during the continuance of an Event of Default
(other than a default in the payment of the Change in Control Purchase
Price with respect to such Securities) in which case, upon such return, the
Change in Control Purchase Notice with respect thereto shall be deemed to
have been withdrawn.
Section 14.3 Certain Definitions. For purposes of this Article
XIV:
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(a) the term "beneficial owner" shall be determined in accordance
with Rules l3d-3 and 13d-5 promulgated by the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), except
that a Person shall be deemed to have "beneficial ownership" of all
securities that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time; and
(b) 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.
(c) "Change in Control" shall be deemed to have occurred at such
time after the original issuance of the Securities as:
(1) any Person is or becomes the beneficial owner, directly or
indirectly, of shares of capital Stock of the Company entitling such Person
to exercise in excess of 50% of the total outstanding voting power of all
classes of the Company's capital Stock entitled to vote generally in the
election of directors;
(2) the Company shall consolidate with, or merge with or into
another Person or convey, transfer, lease or otherwise dispose of all or
substantially all of its assets to any Person, or any Person consolidates
with or merges with or into the Company, in any event pursuant to a
transaction in which the Company's outstanding voting Stock is converted
into or exchanged for cash, securities or other property, other than any
such transactions where:
(i) the Company's voting Stock is not converted or exchanged
at all (except to the extent necessary to reflect a change in the
Company's jurisdiction of incorporation) or is converted into or
exchanged for (i) voting Stock (other than Redeemable Capital Stock)
of the surviving or transferee corporation or (ii) voting Stock (other
than Redeemable Capital Stock) of the surviving or transferee
corporation and cash, securities and other property (other than
capital Stock of the surviving entity), and
(ii) immediately after such transaction, no Person is the
beneficial owner, directly or indirectly, of more than 50% of the
total outstanding voting Stock of the surviving or transferee
corporation;
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(3) during any consecutive two-year period, individuals who at
the beginning of such period constituted the Board of Directors (together
with any new directors whose election to such Board of Directors, or whose
nomination for election by the Company's stockholders, was approved by a
vote of 66-2/3% of the directors then still in office who were either
directors at the beginning of such period of whose election or nomination
for election was previously so approved) cease for any reason to constitute
a majority of the Board of Directors then in office;
(4) the Company is liquidated or dissolved or a special
resolution is passed by the Company's stockholders approving the plan of
liquidation or dissolution other than in a transaction which complies with
the provisions described in Article 8 hereof.
(d) "Redeemable Capital Stock" means any class of series of
capital Stock that, either by its terms, by the terms of any Security into
which it is convertible or exchangeable or by contract or otherwise, is, or
upon the happening of an event or passage of time would be, required to be
redeemed prior to the final stated maturity of the Securities or is
redeemable at the option of the holder thereof at any time prior to such
final stated maturity, or is convertible into or exchangeable for debt
securities at any time prior to such final stated maturity; provided,
however, that Redeemable Capital Stock shall not include any common Stock
the holder of which has the right to put to the Company upon certain
terminations of employment; and provided further, however, that any class
or series of capital Stock that would not constitute Redeemable Capital
Stock but for provisions thereof giving the holder thereof the right to
require the issuer of such capital Stock to repurchase or redeem such
capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the final stated maturity of the Securities shall not
constitute Redeemable Capital Stock if the "asset sale" or "change of
control" provisions applicable to such class or series of capital Stock are
no more favorable to the holders of such capital Stock in any material
respect than the provisions of this Article XIV and such class or series of
capital Stock specifically provides that the issuer of such capital Stock
will not repurchase or redeem any such Stock pursuant to such provision
prior to the Company's repurchase of the Securities as required pursuant to
this Article XIV.
Section 14.4 References to Change in Control Purchase Price.
Whenever in this Indenture 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 Change in Control Purchase Price payable in
respect of such Security to the extent
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that such Change in Control Purchase Price is, was or would be so payable
at such time, and express mention of the Change in Control Purchase Price
in any provision of this Indenture shall not be construed as excluding the
Change in Control Purchase Price in those provisions of this Indenture when
such express mention is not made.
Section 14.5 Covenant to Comply with Securities Laws upon
Purchase of Securities. In connection with any offer to purchase or
purchase of Securities under Section 14.1, the Company shall (i) comply
with Rule 13e-4 and Rule 14e-1 under the Exchange Act, if applicable, (ii)
file the related Schedule 13E-4 (or any successor schedule, form or report)
under the Exchange Act, if applicable, and (iii) otherwise comply with all
Federal and state securities laws regulating the offer and delivery of
shares of Common Stock upon purchase of the Securities (including positions
of the Commission under applicable no-action letters) so as to permit the
rights and obligations under Sections 14.1 to be exercised in the time and
in the manner specified in Sections 14.1.
Section 14.6 Repayment to the Company. The Trustee and the
Paying Agent shall return to the Company, upon written request, any cash or
shares of Common Stock, together with interest on such cash as hereinafter
provided and dividends on such shares of Common Stock, if any, held by them
for the payment of a Change in Control Purchase Price of the Securities
that remain unclaimed as provided in paragraph 13 of the Securities;
provided, however, that to the extent that the aggregate amount of cash
deposited by the Company pursuant to Section 14.3 exceeds the aggregate
Change in Control Purchase Price of the Securities or portions thereof to
be purchased, then promptly after the Business Day following the Change in
Control Purchase Date the Trustee shall return any such excess to the
Company together with interest as hereinafter provided or dividends, if
any, thereon.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed all as of the day and year first above written.
COMMSCOPE, INC.
By: /s/ Jearld Leonhardt
--------------------------------
Name: Jearld Leonhardt
Title: Executive Vice President
and Chief Financial Officer
FIRST UNION NATIONAL BANK,
as Trustee
By: /s/ Shannon Schwartz
--------------------------------
Name: Shannon Schwartz
Title: Assistant Vice President
EXHIBIT 4.6
COMMSCOPE, INC.
$150,000,000
4% CONVERTIBLE SUBORDINATED NOTES DUE 2006
REGISTRATION RIGHTS AGREEMENT
-----------------------------
December 15, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CIBC WORLD MARKETS CORP.
c/o MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1305
Ladies and Gentlemen:
This Registration Rights Agreement (the "Agreement") is made and
entered into this fifteenth day of December, 1999, among CommScope, Inc., a
Delaware corporation (the "Company"), and Merrill Lynch, Pierce, Fenner &
Smith Incorporated and CIBC World Markets Corp. (collectively, the "Initial
Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated
December 9, 1999, among the Company and the Initial Purchasers (the
"Purchase Agreement"), which provides for the sale by the Company to the
Initial Purchasers of an aggregate of $150,000,000 million principal amount
of the Company's 4% Convertible Subordinated Notes due 2006 (the "Firm
Notes"), and, at the election of the Initial Purchasers, solely to cover
overallotments, if any, in connection with the offering of the Firm Notes,
up to $22,500,000 aggregate principal amount of additional 4% Convert-
<PAGE>
ible Subordinated Notes due 2006 (the "Additional Notes," and, together
with the Firm Notes, the "Notes").
As an inducement to the Initial Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, the Company agrees with you, (i) for the
benefit of the Initial Purchasers and (ii) for the benefit of the holders
from time to time of the Notes and the holders from time to time of the
Common Stock, par value $0.01 per share (the "Common Stock"), of the
Company initially issuable upon conversion of the Notes (each of the
foregoing, a "Holder" and, together, the "Holders"), as follows:
Section 1. Definitions. Capitalized terms used in this Agreement
without definition shall have their respective meanings set forth in the
Purchase Agreement. All references to Sections herein are to Sections of
this Agreement unless otherwise indicated. As used in this Agreement, the
following capitalized defined terms shall have the following meanings:
"1933 Act" means the Securities Act of 1933, as amended from time
to time.
"1934 Act" means the Securities Exchange Act of l934, as amended
from time to time.
"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.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in The City
of New York are authorized or obligated by law or executive order to
close.
"Commission" means the Securities and Exchange Commission.
"Conversion Rate" means the term "Conversion Rate" as defined in
the Indenture.
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"Damages Payment Date" means each June 15 and December 15 in the
case of Notes and the Common Stock.
"DTC" means The Depository Trust Company.
"Effectiveness Period" has the meaning set forth in Section 2(b).
"Indenture" means the Indenture dated as of the date hereof among
the Company and First Union National Bank, as trustee, pursuant to
which the Notes are being issued.
"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.
"Notice and Questionnaire" means a written notice delivered to
the Company containing substantially the information called for by the
Form of Selling Securityholder Notice and Questionnaire attached as
Annex A to the Offering Memorandum of the Company dated December 9,
1999 relating to the Notes.
"Notice Holder" means, on any date, any Holder that has delivered
a Notice and Questionnaire to the Company on or prior to such date.
"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, a prospectus
that discloses information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule
430A under the 1933 Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion
of the Registrable Securities.
"Record Holder" means, with respect to any Damages Payment Date
relating to any Note or Common Stock as to which any Liquidated
Damages Amount has accrued, the registered holder of such Note or
Common Stock, as
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the case may be, 15 days prior to the next succeeding Damages
Payment Date.
"Registrable Securities" means the Notes and the shares of Common
Stock issuable upon conversion of the Notes, and any security issued
with respect thereto upon any stock dividend, split or similar event
until, in the case of any such security, the earliest of (i) its
effective registration under the 1933 Act and resale in accordance
with the Registration Statement covering it, (ii) expiration of the
holding period that would be applicable thereto under Rule 144(k) were
it not held by an Affiliate of the Company or (iii) its sale to the
public pursuant to Rule 144.
"Shelf Registration" means a registration effected pursuant to
Section 2.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to the provisions of Section 2 filed
with the Commission which covers some or all of the Registrable
Securities, as applicable, on an appropriate form under Rule 415 under
the 1933 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.
"Trustee" means First Union National Bank (or any successor
entity), the trustee under the Indenture.
"underwriter" means any underwriter of Registrable Securities in
connection with an offering thereof under a Shelf Registration
Statement.
Section 2. Shelf Registration. (a) The Company shall prepare and file
or cause to be prepared and filed with the Commission, as soon as
practicable, but in any event, no later than the date (the "Filing Deadline
Date") that is 90 days after the date of original issuance (the "Issue
Date") of the Notes, a Shelf Registration Statement relating to the offer
and sale of the Registrable Securities by the Holders from time to time in
accordance with the methods of distribution elected by such Holders and set
forth in such Shelf Registration Statement and, thereafter, shall use all
reasonable efforts to cause such Shelf Registration Statement to be
declared effective under the 1933 Act as soon as practicable, but in any
event no later than the
4
<PAGE>
date (the "Effectiveness Deadline Date") that is 180 days following the
Issue Date; provided, however, that no Holder shall be entitled to have the
Registrable Securities held by it covered by such Shelf Registration unless
such Holder shall have provided a Notice and Questionnaire in accordance
with Section 2(c) and is in compliance with Section 3(m). None of the
Company's securityholders (other than the Holders of Registrable
Securities) shall have the right to include any of the Company's securities
in the Shelf Registration Statement.
(b) The Company shall use all reasonable efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period of two
years from the date the Shelf Registration Statement is declared effective
or such shorter period that will terminate upon the earliest of the
following: (A) when all the Notes covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement, (B)
when all shares of Common Stock issued upon conversion of any such Notes
that had not been sold pursuant to the Shelf Registration Statement have
been sold pursuant to the Shelf Registration Statement and (C) when, in the
written opinion of counsel to the Company, all outstanding Registrable
Securities held by persons which are not affiliates of the Company may be
resold without registration under the 1933 Act pursuant to Rule 144(k)
under the 1933 Act or any successor provision thereto (in any such case,
such period being called the "Effectiveness Period").
(c) Each Holder of Registrable Securities wishing to sell
Registrable Securities pursuant to a Shelf Registration Statement and
related Prospectus agrees to deliver a Notice and Questionnaire to the
Company at least five (5) Business Days prior to any intended distribution
of Registrable Securities under the Shelf Registration Statement. From and
after the date the Shelf Registration Statement is declared effective, the
Company shall, as promptly as is practicable after the date a Notice and
Questionnaire and such other information as the Company may reasonably
require pursuant to Section 3(m) is delivered, and in any event within five
(5) Business Days after such date, (i) if required by applicable law, file
with the Commission a post-effective amendment to the Shelf Registration
Statement or prepare and, if required by applicable law, file a supplement
to the related Prospectus or a supplement or amendment to any document
incorporated therein by reference or file any other required document so
that the Holder delivering such Notice and Questionnaire is named as a
selling securityholder in the Shelf Registration Statement and the related
Prospectus in such a manner as to permit such Holder to deliver such
Prospectus to purchasers of the Registrable Securities in accordance with
5
<PAGE>
applicable law and, if the Company shall file a post-effective amendment to
the Shelf Registration Statement, use all reasonable efforts to cause such
post-effective amendment to be declared effective under the 1933 Act as
promptly as is practicable, but in any event by the date (the "Amendment
Effectiveness Deadline Date") that is 45 days after the date such
post-effective amendment is required by this clause to be filed; (ii)
provide such Holder copies of any documents filed pursuant to Section
2(c)(i); and (iii) notify such Holder as promptly as practicable after the
effectiveness under the 1933 Act of any post-effective amendment filed
pursuant to Section 2(c)(i); provided, that if such Notice and
Questionnaire is delivered during a Deferral Period, the Company shall so
inform the Holder delivering such Notice and Questionnaire and shall take
the actions set forth in clauses (i), (ii) and (iii) above upon expiration
of the Deferral Period in accordance with Section 2(d), provided, further ,
that if under applicable law the Company has more than one option as to the
type or manner of making any such filing, it will make the required filing
or filings in the manner or of a type that is reasonably expected to result
in the earliest availability of the Prospectus for effecting resales of
Registrable Securities. Notwithstanding anything contained herein to the
contrary, the Company shall not be under any obligation to name any Holder
that is not a Notice Holder as a selling securityholder in the Shelf
Registration Statement or related Prospectus; provided, however, that any
Holder that becomes a Notice Holder pursuant to the provisions of Section
2(c) of this Agreement (whether or not such Holder was a Notice Holder at
the time the Shelf Registration Statement was declared effective) shall be
named as a selling securityholder in the Shelf Registration Statement or
related Prospectus in accordance with the requirements of this Section
2(c).
(d) The Company shall be deemed not to have used all reasonable
efforts to keep the Shelf Registration Statement effective during the
requisite period if either the Company voluntarily takes any action that
would result in Holders of Registrable Securities covered thereby not being
able to offer and sell any such Registrable Securities during that period,
unless (i) such action is required by applicable law, (ii) upon the
occurrence of any event contemplated by paragraph 3(c)(2)(iii) below, and
such action is taken by the Company in good faith and for valid business
reasons or (iii) the continued effectiveness of the Shelf Registration
6
<PAGE>
Statement would require the Company to disclose a material financing,
acquisition or other corporate development, and the proper officers of the
Company shall have determined in good faith that such disclosure is not in
the best interests of the Company and its stockholders, and, in the case of
clause (ii) above, the Company thereafter promptly comply with the
requirements of Section 3(i) below. The duration of all periods during
which the availability of the Shelf Registration Statement and the
Prospectus is suspended in accordance with clauses (i) through (iii) of the
preceding sentence (each such period of suspension being referred to herein
as a "Deferral Period") shall, without the Company incurring any obligation
to pay liquidated damages pursuant to Section 2(e), not to exceed, in the
aggregate, 90 days in any 12-month period.
(e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to
ascertain the extent of such damages with precision, if (i) the Shelf
Registration Statement has not been filed on or prior to the Filing
Deadline Date, (ii) the Shelf Registration Statement has not been declared
effective under the 1933 Act on or prior to the Effectiveness Deadline
Date, (iii) either the Company has failed to perform its obligations set
forth in Section 2(c) within the time period require therein or (iv) the
aggregate duration of Deferral Periods in any period exceeds the number of
days permitted in respect of such period pursuant to Section 2(d) hereof
(each of the events of a type described in any of the foregoing clauses (i)
through (iv) are individually referred to herein as an "Event," and the
Filing Deadline Date in the case of clause (i), the Effectiveness Deadline
Date in the case of clause (ii), the date by which the Company is required
to perform its obligations set forth in Section 2(c) in the case of clause
(iii) (including the filing of any post-effective amendment prior to the
Amendment Effectiveness Deadline Date) and the date on which the aggregate
duration of Deferral Periods in any period exceeds the number of days
permitted by Section 2(d) hereof in the case of clause (iv), being referred
to herein as an "Event Date"). Events shall be deemed to continue until the
"Event Termination Date," which shall be the following dates with respect
to the respective types of Events: the date the Shelf Registration
Statement is filed in the case of an Event of the type described in clause
(i), the date the Shelf Registration Statement is declared effective under
the Securities Act in the case of an Event of the type described in clause
(ii), the latest date on which the Company perform its obligations set
forth in Section 2(c) in the case of an Event of the type described in
clause (iii) (including, without limitation, the date the relevant
post-effective amendment to the Shelf Registration Statement is declared
effective under the 1933 Act), and termination of the Deferral Period that
caused the limit on the aggregate duration of Deferral Periods in a period
set forth in Section 2(d) to be exceeded in the case of the commencement of
an Event of the type described in clause (iv).
Accordingly, commencing on (and including) any Event Date and
ending on (but excluding) the next date on which there are no Events that
have occurred and are continuing (a "Damages Accrual Period"), the Company
agrees to
7
<PAGE>
pay, as liquidated damages and not as a penalty, an amount (the "Liquidated
Damages Amount"), payable on the Damages Payment Dates to Record Holders of
then outstanding Notes that are Registrable Securities and of then
outstanding shares of Common Stock issued upon conversion of Notes that are
Registrable Securities, as the case may be, accruing, for each portion of
such Damages Accrual Period beginning on and including a Damages Payment
Date (or, in respect of the first time that the Liquidation Damages Amount
is to be paid to Holders on a Damages Payment Date as a result of the
occurrence of any particular Event, from the Event Date) and ending on but
excluding the first to occur of (A) the date of the end of the Damages
Accrual Period or (B) the next Damages Payment Date, at a rate per annum
equal to 0.25% of the principal amount of the Notes for the first 90 day
period after the occurrence of such event and 0.25% for each 90 day period
thereafter, provided that the maximum amount of Liquidated Damages will in
no event exceed 1.0% per annum of the principal amount of the Notes or, in
respect of any shares of Common Stock into which the Notes have been
converted, at a rate equal to $2.50 per annum per 20.7512 shares of Common
Stock (being equal to the number of shares of common stock issuable upon
conversion of $1,000 principal amount of Notes as of the date hereof, such
number being subject to adjustment as of any subsequent date according to
the Conversion Rate in effect as of such date of determination) for the
first 90 day period after the occurrence of such event and $2.50 per annum
per 20.7512 shares of Common Stock (subject to adjustment as stated above)
for each 90 day period thereafter, provided that the maximum amount of
Liquidated Damages will in no event exceed $10.00 per annum per 20.7512
shares of Common Stock (subject to adjustment as stated above); provided,
that in the case of a Damages Accrual Period that is in effect solely as a
result of an Event of the type described in clause (iii) of the immediately
preceding Paragraph, such Liquidated Damages Amount shall be paid only to
the Holders that have delivered Notice and Questionnaires that caused the
Company to incur the obligations set forth in Section 2(c) the
non-performance of which is the basis of such Event; provided further, that
any Liquidated Damages Amount accrued with respect to any Note or portion
thereof called for redemption on a redemption date or converted into Common
Stock on a conversion date prior to the Damages Payment Date, shall, in any
such event, be paid instead to the Holder who submitted such Note or
portion thereof for redemption or conversion on the applicable redemption
date or conversion date, as the case may be, on such date (or promptly
following the conversion date, in the case of conversion). Notwithstanding
the foregoing, no Liquidated Damages Amounts shall accrue as to any
Registrable Security from and after the earlier of (x) the date such
security is no longer a Registrable Security and (y) termination of the
Effectiveness Period pursuant to Section 2(b). The rate of accrual of the
Liquidated Damages Amount with
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<PAGE>
respect to any period shall not exceed the rate provided for in this
paragraph notwithstanding the occurrence of multiple concurrent Events.
Following the cure of all Events requiring the payment by the Company of
Liquidated Damages Amounts to the Holders of Registrable Securities
pursuant to this Section, the accrual of Liquidated Damages Amounts will
cease (without in any way limiting the effect of any subsequent Event
requiring the payment of Liquidated Damages Amount by the Company).
The Trustee shall be entitled, on behalf of Holders of Notes or
Common Stock issued upon conversion of Notes, to seek any available remedy
for the enforcement of this Agreement, including for the payment of any
Liquidated Damages Amount. Notwithstanding the foregoing, the parties agree
that the sole damages payable for a violation of the terms of this
Agreement with respect to which liquidated damages are expressly provided
shall be such liquidated damages. Nothing shall preclude a Notice Holder or
Holder of Registrable Securities from pursuing or obtaining specific
performance or other equitable relief with respect to this Agreement.
All of the Company's obligations set forth in this Section 2(e)
that are outstanding with respect to any Registrable Security at the time
such security ceases to be a Registrable Security shall survive until such
time as all such obligations with respect to such security have been
satisfied in full.
The parties hereto agree that the liquidated damages provided for
in this Section 2(e) constitute a reasonable estimate of the damages that
may be incurred by Holders of Registrable Securities by reason of the
failure of the Shelf Registration Statement to be filed or declared
effective or available for effecting resales of Registrable Securities in
accordance with the provisions hereof.
Section 3. Registration Procedures. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to the Initial Purchasers, prior to
the filing thereof with the Commission, a copy of any Shelf Registration
Statement, and each amendment thereof and each amendment or supplement, if
any, to the Prospectus included therein and shall use its reasonable best
efforts to reflect in each such document, when so filed with the
Commission, such comments as the Initial Purchasers reasonably may propose.
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<PAGE>
(b) The Company shall take such action as may be necessary so
that (i) any Shelf Registration Statement, and any amendment thereto, and
any Prospectus forming part thereof, and any amendment or supplement
thereto (and each report or other document incorporated therein by
reference in each case) complies in all material respects with the 1933 Act
and the 1934 Act and the respective rules and regulations thereunder, (ii)
any Shelf Registration Statement, and any amendment thereto, does not, when
it becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any Prospectus forming
part of any Shelf Registration Statement, and any amendment or supplement
to such Prospectus, does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements,
in the light of the circumstances under which they were made, not
misleading.
(c) (1) The Company shall advise the Initial Purchasers and, in
the case of clause (i), the Holders and, if requested by the Initial
Purchasers or any such Holder, confirm such advice in writing:
(i) 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; and
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus included
therein or for additional information.
(2) The Company shall advise the Initial Purchasers and the Holders
and, if requested by the Initial Purchasers or any such Holder, confirm
such advice in writing of:
(i) 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;
(ii) the receipt by the Company of any notification with respect
to the suspension of the qualification of the securities included therein
for sale in any jurisdiction or the initiation of any proceeding for such
purpose; and
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(iii) the happening of any event that requires the making of any
changes in the Shelf Registration Statement or the Prospectus so that, as
of such date, the Shelf Registration Statement and the Prospectus do not
contain an untrue statement of a material fact and do not omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading (which advice
shall be accompanied by an instruction to suspend the use of the Prospectus
until the requisite changes have been made).
(d) The Company shall use its 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 Holder of Registrable
Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one copy of such Shelf Registration
Statement and any post-effective amendments thereto, including financial
statements and schedules, and, if the Holder so requests in writing, all
reports and other documents incorporated by reference in the Shelf
Registration Statement and exhibits (including those incorporated by
reference) except that the foregoing provision will not apply to regular
periodic reports filed with the Commission on Forms 10-Q or 10-K or Current
Reports on Form 8-K (or any similar successor forms), or exhibits to any
such documents unless requested.
(f) The Company shall, during the Effectiveness Period, deliver
to each Holder of Registrable Securities included within the coverage of
any Shelf Registration Statement, without charge, as many copies of the
Prospectus (including each preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such
Holder may reasonably request; and the Company consents (except upon and
during the continuance of any event described in paragraphs 2(d) or
3(c)(2)(iii) above or Section 6(c)) to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or
supplement thereto during the Shelf Registration Period.
(g) Prior to any offering of Registrable Securities pursuant to
any Shelf Registration Statement, the Company shall register or qualify or
cooperate with the Holders of Registrable Securities included therein and
their respective counsel in
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connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions in the United States as any such Holders reasonably request
in writing and do any and all other acts or things necessary or advisable
to enable the offer and sale in such jurisdictions of the Registrable
Securities covered by such Shelf Registration Statement; provided, however,
that in no event shall the Company be obligated to (i) qualify generally to
do business or 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), (ii) file any general consent to service of process in
any jurisdiction where it is not as of the date hereof then so subject or
(iii) subject itself to taxation in any such jurisdiction if it is not so
subject.
(h) Unless any Registrable Securities shall be in book-entry only
form, the Company shall cooperate with the Holders of Registrable
Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to any
Shelf Registration Statement free of any restrictive legends and in such
permitted denominations and registered in such names as Holders may request
in connection with the sale of Registrable Securities pursuant to such
Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by paragraph
3(c)(2)(iii) above, the Company shall promptly prepare a post-effective
amendment to any Shelf Registration Statement or an amendment or supplement
to the related Prospectus or file any other required document so that, as
thereafter delivered to purchasers of the Registrable Securities included
therein, the Prospectus will not include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (except, in each case, for an untrue statement of a material
fact or omission of a material fact made in reliance on and in conformity
with written information furnished to the Company by or on behalf of
Holders specifically for use therein). The Company agrees to notify the
Holders to suspend use of the Prospectus, and the Holders shall suspend use
of the Prospectus, and not communicate such material non-public information
to any third party, and not sell or purchase, or offer to sell or purchase,
any securities of the Company, until the Company has amended or
supplemented the Prospectus so it does not contain any such misstatement or
omission. Subject to Section 2(d), at such time as such public disclosure
is otherwise made or the Company determines in good faith that such
disclosure is not necessary, the Company agrees to notify the Holders of
such determination and to amend or supplement the Prospectus if necessary,
so it does not
12
<PAGE>
contain any such untrue statement or omission therein and to furnish the
Holders such numbers of copies of the Prospectus as so amended or
supplemented as the Holders may reasonably request.
(j) Not later than the effective date of any Shelf Registration
Statement hereunder, the Company shall provide a CUSIP number for all
Registrable Securities covered by any Shelf Registration Statement and
provide the Trustee with certificates for the Notes that are in a form
eligible for deposit with DTC.
(k) 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 securityholders or otherwise provide in accordance with
Section 11(a) of the 1933 Act as soon as practicable after the effective
date of the applicable Shelf Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the 1933 Act.
(l) The Company shall its best efforts to cause the Indenture to
be qualified under the Trust Indenture Act in a timely manner.
(m) The Company may require each Holder of Registrable Securities
to be sold pursuant to any Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of such
Registrable Securities as the Company may from time to time reasonably
require for inclusion in such Shelf Registration Statement and the Company
may exclude from such registration the Registrable Securities of any Holder
that fails to furnish such information within a reasonable time after
receiving such request, and the Company shall have no obligation to
register under the Securities Act the Registrable Securities of any Holder
who fails to furnish such information as provided in this paragraph.
(n) The Company will use its best efforts to cause the Common
Stock issuable upon conversion of the Notes to be listed on the New York
Stock Exchange on or prior to the effective date of any Shelf Registration
Statement hereunder.
(o) Upon (i) the filing of any Shelf Registration Statement and
(ii) the effectiveness of any Shelf Registration Statement, the Company
shall announce the same, in each case by release to Reuters Economic
Services and Bloomberg Business News (or any successor thereto).
13
<PAGE>
(p) The Company shall use its best 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.
Section 4. Registration Expenses. Except as otherwise provided in
Section 6, the Company shall bear all fees and expenses incurred in
connection with the performance of its obligations under Sections 2 and 3
and shall bear or reimburse the Holders for the reasonable fees and
disbursements of not more than one 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. Notwithstanding the foregoing, the
Holders of Registrable Securities being registered shall pay all agency
fees and commissions and underwriting discounts and commissions and
transfer taxes, if any, attributable to such sale of Registrable
Securities.
Section 5. Indemnification and Contribution . (a) In connection with
any Shelf Registration Statement, the Company shall indemnify and hold
harmless the Initial Purchasers, each Holder, each underwriter who
participates in an offering of Registrable Securities, and each person, if
any, who controls any of such parties within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Shelf
Registration Statement (or any amendment thereto) covering Registrable
Securities, including all documents incorporated therein by reference, or
the omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (or any amendment
or supplement thereto) or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission,
14
<PAGE>
provided that (subject to Section 5(d) below) any such settlement is
effected with the written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including fees and disbursements of counsel chosen by an indemnified
party), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of an
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Company by the Initial Purchasers, such Holder or any underwriter in
writing expressly for use in the Shelf Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement
thereto).
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Initial Purchasers, each underwriter who
participates in an offering of Registrable Securities and the other selling
Holders and each of their respective directors and officers and each
Person, if any, who controls the Company, the Initial Purchasers, any
underwriter or any other selling Holder within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, from and against any and all
loss, liability, claim, damage and expense described in the indemnity
contained in Section 5(a) hereof, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions,
made in the Shelf Registration Statement (or any amendment thereto) or any
Prospectus included therein (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such selling Holder expressly for use in the Shelf Registration
Statement (or any amendment thereto) or such Prospectus (or any amendment
or supplement thereto); provided , however, that no such Holder shall be
liable for any claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Registrable Securities pursuant to
the Shelf Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or
proceeding
15
<PAGE>
commenced against it in respect of which indemnity may be sought hereunder,
but failure so to notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account
of this indemnity agreement. An indemnifying party may participate at its
own expense in the defense of such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. In no event
shall the indemnifying party or parties be liable for the fees and expenses
of more than one counsel (in addition to any local counsel) separate from
their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be
sought under this Section 5 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party
from all liability arising out of such litigation, investigation,
proceeding 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 at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 5(a)(ii) effected without
its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of
such settlement at least 30 days prior to such settlement being entered
into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) If the indemnification provided for in this Section 5 is for
any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative fault of the Company on the
16
<PAGE>
one hand and the Holders and the Initial Purchasers on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative fault of the Company on the one hand and the Holders
and the Initial Purchasers on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company, the Holders
or the Initial Purchasers and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.
The Company, the Holders and the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to this Section 5
were determined by pro rata allocation (even if the Initial 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 Section 5. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party
and referred to above in this Section 5 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue or
alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 5, no Initial
Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Notes sold by it were offered
exceeds the amount of any damages which such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 5, each Person, if any, who controls
an Initial Purchaser or Holder within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Initial Purchaser or Holder, and each director of the
Company, and each Person, if any, who
17
<PAGE>
controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as
the Company. The Initial Purchasers' respective obligations to contribute
pursuant to this Section 5(e) are several in proportion to the principal
amount of Notes set forth opposite their respective names in Schedule A to
the Purchase Agreement and not joint.
Section 6. Underwritten Offering.
---------------------
(a) The Holders of Registrable Securities covered by the Shelf
Registration Statement who desire to do so may sell such Registrable
Securities in an underwritten offering in accordance with the conditions
set forth below. In any such underwritten offering, the investment banker
or bankers and manager or managers that will administer the offering will
be selected by, and the underwriting arrangements with respect thereto will
be approved by, the Holders of a majority of the Registrable Securities to
be included in such offering; provided, however , that (i) such investment
bankers and managers and underwriting arrangements must be reasonably
satisfactory to the Company and (ii) the Company shall not be obligated to
arrange for more than one underwritten offering during the Effectiveness
Period. No Holder may participate in any underwritten offering contemplated
hereby unless such Holder (i) agrees to sell such Holder's Registrable
Securities in accordance with any approved underwriting arrangements, (ii)
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
(iii) at least 30% of the outstanding Registrable Securities are included
in such underwritten offering. The Holders participating in any
underwritten offering shall be responsible for any expenses customarily
borne by selling securityholders, including underwriting discounts and
commissions and fees and expenses of counsel to the selling securityholders
and shall reimburse the Company for the fees and disbursements of its
counsel, its independent public accountants and any printing expenses
incurred in connection with such underwritten offering. Notwithstanding the
foregoing, upon receipt of a request from the Managing Underwriter or a
representative of Holders of a majority of the Registrable Securities
outstanding to prepare and file an amendment or supplement to the Shelf
Registration Statement and Prospectus in connection with an underwritten
offering, the Company may delay the filing of any such amendment or
supplement for up to 90 days if the Company in good faith have a valid
business reason for such delay.
(b) The Company shall enter into such customary agreements
(including underwriting agreements in customary form) which are reasonably
18
<PAGE>
acceptable to the Company, and take all other reasonably requested actions
in order to expedite or facilitate the registration or the disposition of
the Registrable Securities, and in connection therewith, if an underwriting
agreement is entered into, cause the same to contain indemnification
provisions and procedures substantially identical to those set forth in
Section 5 (or such other provisions and procedures acceptable to the
Managing Underwriters, if any) with respect to all parties to be
indemnified pursuant to Section 5.
(c) Each Holder of Registrable Securities agrees, if requested
(pursuant to a timely written notice) by the managing underwriters in an
underwritten offering made pursuant to a Shelf Registration Statement, not
to effect any private sale or distribution (including a sale pursuant to
Rule 144(k) and Rule 144A, but excluding non-public sales to any of its
affiliates, officers, directors, employees and controlling person) of any
of the Notes in the case of an underwritten offering of the Notes, or the
Common Stock, in the case of an underwritten offering of shares of Comon
Stock constituting Registrable Securities, during the period beginning 10
days prior to, and ending 90 days after the closing date of such
underwritten offering.
(d) The Company shall (i) make reasonably available for
inspection by the Holders of Registrable Securities to be registered
thereunder, any underwriter participating in any disposition pursuant to
such Shelf Registration Statement, and any attorney, accountant or other
agent retained by such Holders or any such underwriter all relevant
financial and other records, pertinent corporate documents and properties
of the Company and its subsidiaries; (ii) cause the Company's officers,
directors and employees to make reasonably available for inspection all
relevant information reasonably requested by such Holders 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
Holders or any such underwriter, attorney, accountant or agent, unless such
disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or
through a third party without an accompanying obligation of
confidentiality; and provided further that the foregoing inspection and
information gathering shall, to the greatest extent possible, be
coordinated on behalf of the Holders and the other parties entitled thereto
by one counsel designated by and on behalf of such Holders and other
parties reasonably acceptable to the Company; (iii) make such
representations and warranties to the Holders of Registrable Securities
registered thereunder and the underwriters, if any,
19
<PAGE>
in form, substance and scope as are customarily made by companies to
underwriters in primary underwritten offerings and covering matters
including, but not limited to, those set forth in the Purchase Agreement;
(iv) obtain opinions of counsel to the Company (who may be the general
counsel of the Company) and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the Managing
Underwriters, if any) in customary form addressed to each selling 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 Holders and underwriters (it
being agreed that the matters to be covered by such opinion or a written
statement by such counsel delivered in connection with such opinions shall
include, 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) obtain "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 such
Holder of Registrable Securities registered thereunder and the
underwriters, if any, in customary form and covering matters of the type
customarily covered in "comfort letters" in connection with primary
underwritten offerings; and (vi) deliver such other customary documents and
certificates as may be reasonably requested by any such Holders and the
Managing Underwriters, if any, including those to evidence compliance with
Section 3(i) and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company. The
foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this
Section 6(d) shall be performed at each closing under any underwritten
offering to the extent required thereunder.
Section 7. Miscellaneous.
-------------
(a) Rule 144 and Rule 144A. For so long as the Company is subject
to the reporting requirements of Section 13 or 15 of the 1934 Act, the
Company covenants that it will file the reports required to be filed by it
under the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules
and regulations
20
<PAGE>
adopted by the Commission thereunder. If the Company ceases to be so
required to file such reports, the Company covenants that it will upon the
request of any Holder of Registrable Securities (a) make publicly available
such information as is necessary to permit sales pursuant to Rule 144 under
the 1933 Act, (b) deliver such information to a prospective purchaser as is
necessary to permit sales pursuant to Rule 144A under the 1933 Act and it
will take such further action as any Holder of Registrable Securities may
reasonably request, and (c) take such further action that is reasonable in
the circumstances, in each case, to the extent required from time to time
to enable such Holder to sell its Registrable Securities without
registration under the 1933 Act within the limitation of the exemptions
provided by (i) Rule 144 under the 1933 Act, as such Rule may be amended
from time to time, (ii) Rule 144A under the 1933 Act, as such Rule may be
amended from time to time, or (iii) any similar rules or regulations
hereafter adopted by the Commission.
(b) No Conflicting Agreements. The Company is not, as of the date
hereof, a party to, nor shall it, on or after the date of this Agreement,
enter into, any agreement with respect to its securities that conflicts
with the rights granted to the Holders of Registrable Securities in this
Agreement. The Company represents and warrants that the rights granted to
the Holders of Registrable Securities hereunder do not in any way conflict
with the rights granted to the holders of the Company's securities under
any other agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the
written consent of the Initial Purchasers.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
1. if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this
Section 7(d);
2. if to the Initial Purchasers, initially at the address
set forth in the Purchase Agreement; and
21
<PAGE>
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 duly given when
received.
The Initial Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties and the Holders, including, without the need for an express
assignment or any consent by the Company thereto, subsequent Holders of
Registrable Securities. The Company hereby agrees to extend the benefits of
this Agreement to any Holder of Registrable Securities and any such Holder
may specifically enforce the provisions of this Agreement as if an original
party hereto.
(f) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g) Headings. The headings in this agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK.
(i) Severability. In the event that any one of 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
22
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement among the Company and you.
Very truly yours,COMMSCOPE, INC.
By: /s/ Jearld Leonhardt
--------------------------------
Name: Jearld Leonhardt
Title: Executive Vice President and
Chief Financial Officer
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
The foregoing Registration Rights Agreement is hereby confirmed
and accepted as of the date first above written.
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CIBC WORLD MARKETS CORP.
By: MERRILL LYNCH & CO.Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: /s/ David Rosenberg
--------------------------
Name: David Rosenberg
Title: Vice President
EXHIBIT 5
[LETTERHEAD OF FRIED FRANK HARRIS SHRIVER & JACOBSON]
212-859-8076
(FAX: 212-859-4000)
January 14, 2000
CommScope, Inc.
1375 Lenoir-Rhyne Boulevard
Hickory, North Carolina 28601
Ladies and Gentlemen:
We are acting as special counsel to CommScope, Inc., a Delaware
corporation (the "Company"), in connection with the Registration Statement
on Form S-3 (the "Registration Statement") under the Securities Act of
1933, as amended, covering the registration of $172,500,000 in aggregate
principal amount of the Company's 4% Convertible Subordinated Notes due
2006 (the "Notes") issued pursuant to the Indenture, dated as of December
15, 1999 (the "Indenture"), by and between the Company and First Union
National Bank, as trustee (the "Trustee"). The Notes are convertible into
shares (the "Shares") of common stock, par value $.01 per share, of the
Company.
With your permission, all assumptions and statements of reliance
herein have been made without any independent investigation or verification
on our part except to the extent otherwise expressly stated, and we express
no opinion with respect to the subject matter or accuracy of such
assumptions or items relied upon.
In connection with this opinion, we have (i) investigated such
questions of law, (ii) examined originals or certified, conformed or
reproduction copies of such agreements, instruments, documents and records
of the Company, such certificates of public officials and such other
documents, and (iii) received such information from officers and
representatives of the Company as we have deemed necessary or appropriate
for the purposes of this opinion.
In all such examinations, we have assumed the legal capacity of all
natural persons executing documents, the genuineness of all signatures, the
authenticity of original and certified documents and the conformity to
original or certified documents of all copies submitted to us as conformed
or reproduction copies. As to various questions of fact relevant to the
opinions expressed herein, we have relied upon, and assume the accuracy of,
representations and warranties contained in the documents and certificates
and oral or written statements and other information of or from
representatives of the Company and
<PAGE>
others and assume compliance on the part of all parties to the documents
with their covenants and agreements contained therein.
To the extent it may be relevant to the opinions expressed herein, we
have assumed that the Trustee has the power and authority to enter into and
perform the Indenture and to consummate the transactions contemplated
thereby, and that the Indenture has been duly authorized, executed and
delivered by, and constitutes a valid and binding obligation of, the
Trustee.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, we are of the opinion
that:
(1) The Notes constitute valid and binding obligations of the
Company; and
(2) The Shares have been duly authorized and, when issued and
delivered upon conversion of the Notes in accordance with the terms of
the Indenture and as contemplated in the Registration Statement, will
be validly issued, fully paid and non-assessable.
The opinion in paragraph (1) above is subject to the following:
(i) applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other laws affecting
creditors' rights and remedies generally; and
(ii) general principles of equity, including, without
limitation, standards of materiality, good faith, fair dealing
and reasonableness, equitable defenses and limits as to the
availability of equitable remedies, whether such principles are
considered in a proceeding at law or in equity.
The opinions expressed herein are limited to the laws of the State of
New York and, to the extent relevant to the opinions expressed herein, the
Delaware General Corporation Law, as currently in effect. The opinions
expressed herein are given as of the date hereof, and we undertake no
obligation to supplement this letter if any applicable laws change after
the date hereof or if we become aware of any facts that might change the
opinions expressed herein after the date hereof or for any other reason.
2
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the caption
"Validity of Securities" in the Prospectus forming a part of the
Registration Statement. In giving such consent, we do not hereby admit that
we are in the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Lois Herzeca
-------------------------------------
Lois Herzeca
3
EXHIBIT 12
<TABLE>
<CAPTION>
Nine Months Ended
Years ended December 31, September 30,
------------------------------------------------- ----------------------
1994 1995 1996 1997 1998 1998 1999
------------------------------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Actual ratio of earnings to fixed charges:
Income before income taxes 75,485 76,713 92,103 61,514 60,214 41,024 75,528
Add fixed charges:
Interest expense 12,281 8,891 10,091 13,615 15,298 11,990 7,673
Amortization of deferred financing fees - - - 70 150 112 116
------------------------------------------------- ----------------------
Total earnings as defined 87,766 85,604 102,194 75,199 75,662 53,126 83,317
Fixed charges:
Interest expense 12,281 8,891 10,091 13,615 15,298 11,990 7,673
Amortization of deferred financing fees - - - 70 150 112 116
------------------------------------------------- ----------------------
Total fixed charges as defined 12,281 8,891 10,091 13,685 15,448 12,102 7,789
------------------------------------------------- ----------------------
ACTUAL RATIO OF EARNINGS TO FIXED CHARGES 7.15 9.63 10.13 5.49 4.90 4.39 10.70
================================================= ======================
Pro forma
Pro forma Nine months
Year ended ended
December 31, September 30,
1998 1999
Adjusted Adjusted
-------------- --------------
Pro forma ratio of earnings to fixed charges:
Income before income taxes 62,921 76,149
Add fixed charges:
Interest expense 11,871 6,512
Amortization of deferred financing fees 870 656
-------------- --------------
Total earnings as defined 75,662 83,317
Fixed charges:
Interest expense 11,871 6,512
Amortization of deferred financing fees 870 656
-------------- --------------
Total fixed charges as defined 12,741 7,168
-------------- --------------
PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES 5.94 11.62
============== ==============
</TABLE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of CommScope, Inc. on Form S-3 of our report dated January 29, 1999
appearing in the Annual Report on Form 10-K of CommScope, Inc. for the year
ended December 31, 1998 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Hickory, North Carolina
January 10, 2000
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
----------
FIRST UNION NATIONAL BANK
(Exact name of trustee as specified in its charter)
United States National Bank 22-1147033
(State of incorporation if (I.R.S. employer
not a national bank) identification no.)
First Union National Bank
230 South Tryon Street, 9th Floor
Charlotte, North Carolina 28288-1179
(Address of principal (Zip Code)
executive offices)
Same as above
-------------
(Name, address and telephone number, including
area code, of trustee's agent for service)
CommScope, Inc.
(Exact name of obligor as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
36-4135495
(I.R.S. employer identification no.)
Frank B. Wyatt, II
Vice President, General Counsel & Secretary
CommScope, Inc.
1375 Lenoir-Rhyne Boulevard
P.O. Box 339
Hickory, NC 28603-0339
(Address, including zip code, of principal executive offices)
--------------------
Convertible Subordinated Notes
(Title of the indenture securities)
------------------------------------------------
<PAGE>
1. General information. Furnish the following information as to the
trustee:
(a)Name and address of each examining or supervising authority to
which it is subject
- ----------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------
Federal Reserve Bank of Richmond, Richmond, VA
Comptroller of the Currency Washington, D.C.
Securities and Exchange Commission
Division of Market Regulation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b)Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
2. Affiliations with obligor and underwriters. If the obligor or any
underwriter for the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
(See Note 1 on Page 4.)
Because the obligor is not in default on any securities issued under
indentures under which the applicant is trustee, Items 3 through 15 are not
required herein.
16. List of Exhibits.
----------------
All exhibits identified below are filed as a part of this statement of
eligibility.
1. A copy of the Articles of Association of First Union National Bank as
now in effect, which contain the authority to commence business and a grant
of powers to exercise corporate trust powers.
<PAGE>
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the Articles of Association.
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 exhibits (1) or (2) above.
4. A copy of the existing By-laws of First Union National Bank, or
instruments corresponding thereto.
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939 is included at Page 4 of this Form T-1 Statement.
7. A copy of the latest report of condition of the trustee published
pursuant to law or to the requirements of its supervising or examining
authority is attached hereto.
8. Inapplicable.
9. Inapplicable.
3
<PAGE>
NOTE
Note 1: Inasmuch as this Form T-1 is filed prior to the
ascertainment by the Trustee of all facts on which to base a
responsive answer to Item 2, the answer to said Item is based on
incomplete information. Item 2 may, however, be considered
correct unless amended by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, First Union National Bank, a national
association organized and existing under the laws of the United
States of America, has duly caused this statement of eligibility
and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Charlotte, and
State of North Carolina, on the ___day of January, 2000.
FIRST UNION NATIONAL BANK
(trustee)
By:
-----------------------------
Its:
--------------------------
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939, as
amended, and in connection with the proposed issuance by
CommScope, Inc., First Union National Bank as the trustee herein
named, hereby consents that reports of examinations of said
Trustee by Federal, State, Territorial or District authorities
may be furnished by such authorities to the Securities and
Exchange Commission upon requests therefor.
FIRST UNION NATIONAL BANK
By:
-----------------------------
Name:
--------------------------
Title:
-------------------------
Dated: January __, 2000
4
<PAGE>
CHARTER NO. 22693
FIRST UNION NATIONAL BANK
ARTICLES OF ASSOCIATION
-----------------------
(as restated effective February 26, 1998)
For the purpose of organizing an Association to carry on the business of
banking under the laws of the United States, the undersigned do enter into
the following Articles of Association:
FIRST. The title of this Association shall be FIRST UNION NATIONAL
BANK.
SECOND. The main office of the Association shall be in Charlotte,
County of Mecklenburg, State of North Carolina. The general business of the
Association shall be conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not
less than five nor more than twenty-five directors, the exact number of
directors within such minimum and maximum limits to be fixed and determined
from time to time by resolution of a majority of the full Board of
Directors or by resolution of the shareholders at any annual or special
meeting thereof. Unless otherwise provided by the laws of the United
States, any vacancy in the Board of Directors for any reason, including an
increase in the number thereof, may be filled by action of the Board of
Directors.
FOURTH. The annual meeting of the shareholders for the election of
directors and the transaction of whatever other business may be brought
before said meeting shall be held at the main office or such other place as
the Board of Directors may designate, on the day of each year specified
therefor in the ByLaws, but if no election is held on that day, it may be
held on any subsequent day according to the provisions of law; and all
elections shall be held according to such lawful regulations as may be
prescribed by the Board of Directors.
Nominations for election to the Board of Directors may be made by the
Board of Directors or by any stockholder of any outstanding class of
capital stock of the bank entitled to vote for election of directors.
Nominations, other than those made by or on behalf of the existing
management of the bank, shall be made in writing and shall be delivered or
mailed to the President of the bank and to the Comptroller of the Currency,
Washington, D.C., not less than 14 days nor more
<PAGE>
than 50 days prior to any meeting of stockholders called for the election
of directors, provided, however, that if less than 21 days' notice of the
meeting is given to shareholders, such nomination shall be mailed or
delivered to the President of the Bank and to the Comptroller of the
Currency not later than the close of business on the seventh day following
the day on which the notice of meeting was mailed. Such notification shall
contain the following information to the extent known to the notifying
shareholder: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the bank that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder;
and (e) the number of shares of capital stock of the bank owned by the
notifying shareholder. Nominations not made in accordance herewith may, in
his discretion, be disregarded by the Chairman of the meeting, and upon his
instructions, the vote tellers may disregard all votes cast for each such
nominee.
FIFTH.
-----
(a) General. The amount of capital stock of this Association shall be
(1) 25,000,000 shares of common stock of the par value of twenty dollars
($20.00) each (the "Common Stock") and (ii) 160,540 shares of preferred
stock of the par value of one dollar ($ 1. 00) each (the "Non-Cumulative
Preferred Stock"), having the rights, privileges and preferences set forth
below, but said capital stock may be increased or decreased from time to
time in accordance with the provisions of the laws of the United States.
(b) Terms of the Non-Cumulative Preferred Stock.
-------------------------------------------
1. General. Each share of Non-Cumulative Preferred Stock shall be
identical in all respects with the other shares of Non-Cumulative
Preferred Stock. The authorized number of shares of Non-Cumulative
Preferred Stock may from time to time be increased or decreased (but
not below the number then outstanding) by the Board of Directors.
Shares of Non-Cumulative Preferred Stock redeemed by the Association
shall be canceled and shall revert to authorized but unissued shares
of Non-Cumulative Preferred Stock.
2. Dividends.
---------
(a) General. The holders of Non-Cumulative Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of
Directors, but only out of funds legally available therefor,
non-cumulative cash dividends at the annual rate of $83.75 per
share, and no more, payable quarterly on
2
<PAGE>
the first days of December, March, June and September,
respectively, in each year with respect to the quarterly dividend
period (or portion thereof) ending on the day preceding such
respective dividend payment date, to shareholders of record on
the respective date, not exceeding fifty days preceding such
dividend payment date, fixed for that purpose by the Board of
Directors in advance of payment of each particular dividend.
Notwithstanding the foregoing, the cash dividend to be paid on
the first dividend payment date after the initial issuance of
Non-Cumulative Preferred Stock and on any dividend payment date
with respect to a partial dividend period shall be $83.75 per
share multiplied by the fraction produced by dividing the number
of days since such initial issuance or in such partial dividend
period, as the case may be, by 360.
(b) Non-cumulative Dividends. Dividends on the shares of
Non-cumulative Stock shall not be cumulative and no rights shall
accrue to the holders of shares of Non-Cumulative Preferred Stock
by reason of the fact that the Association may fail to declare or
pay dividends on the shares of NonCumulative Preferred Stock in
any amount in any quarterly dividend period, whether or not the
earnings of the Association in any quarterly dividend period were
sufficient to pay such dividends in whole or in part, and the
Association shall have no obligation at any time to pay any such
dividend.
(c) Payment of Dividends. So long as any share of Non-Cumulative
Preferred Stock remains outstanding, no dividend whatsoever shall
be paid or declared and no distribution made on any junior stock
other than a dividend payable in junior stock, and no shares of
junior stock shall be purchased, redeemed or otherwise acquired
for consideration by the Association, directly or indirectly
(other than as a result of a reclassification of junior stock, or
the exchange or conversion of one junior stock for or into
another junior stock, or other than through the use of the
proceeds of a substantially contemporaneous sale of other junior
stock), unless all dividends on all shares of non-cumulative
Preferred Stock and non-cumulative Preferred Stock ranking on a
parity as to dividends with the shares of Non-Cumulative
Preferred Stock for the most recent dividend period ended prior
to the date of such payment or declaration shall have been paid
in full and all dividends on all shares of cumulative Preferred
Stock ranking on a parity as to dividends with the shares of
NonCumulative Stock (notwithstanding that dividends on such stock
are cumulative) for all past dividend periods shall have been
paid in full. Subject to the foregoing, and not otherwise, such
dividends (payable in cash, stock or otherwise) as may be
determined by the Board of Directors may be declared and paid on
any junior stock from time to time out of any
3
<PAGE>
funds legally available therefor, and the Non-Cumulative
Preferred Stock shall not be entitled to participate in any such
dividends, whether payable in cash, stock or otherwise. No
dividends shall be paid or declared upon any shares of any class
or series of stock of the Association ranking on a parity
(whether dividends on such stock are cumulative or
non-cumulative) with the Non-Cumulative Preferred Stock in the
payment of dividends for any period unless at or prior to the
time of such payment or declaration all dividends payable on the
Non-cumulative Preferred Stock for the most recent dividend
period ended prior to the date of such payment or declaration
shall have been paid in full. When dividends are not paid in
full, as aforesaid, upon the Non-Cumulative Preferred Stock and
any other series of Preferred Stock ranking on a parity as to
dividends (whether dividends on such stock are cumulative or
non-cumulative) with the NonCumulative Preferred Stock, all
dividends declared upon the NonCumulative Preferred Stock and any
other series of Preferred Stock ranking on a parity as to
dividends with the Non-Cumulative Preferred Stock shall be
declared pro rata so that the amount of dividends declared per
share on the Non-cumulative Preferred Stock and such other
Preferred Stock shall in all cases bear to each other the same
ratio that accrued dividends per share on the Non-Cumulative
Preferred Stock (but without any accumulation in respect of any
unpaid dividends for prior dividend periods on the shares of
Non-Cumulative Stock) and such other Preferred Stock bear to each
other. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the
NonCumulative Preferred Stock which may be in arrears.
3. Voting. The holders of Non-Cumulative Preferred Stock shall not
have any right to vote for the election of directors or for any
other purpose.
4. Redemption.
----------
(a) Optional Redemption. The Association, at the option of the
Board of Directors, may redeem the whole or any part of the
shares of NonCumulative Preferred Stock at the time outstanding,
at any time or from time to time after the fifth anniversary of
the date of original issuance of the Non-Cumulative Preferred
Stock, upon notice given as hereinafter specified, at the
redemption price per share equal to $1,000 plus an amount equal
to the amount of accrued and unpaid dividends from the
immediately preceding dividend payment date (but without any
accumulation for unpaid dividends for prior dividend periods on
the shares of Non-Cumulative Preferred Stock) to the redemption
date.
4
<PAGE>
(b) Procedures. Notice of every redemption of shares of
Non-Cumulative Preferred Stock shall be mailed by first class
mail, postage prepaid, addressed to the holders of record of the
shares to be redeemed at their respective last addresses as they
shall appear on the books of the Association. Such mailing shall
be at least 10 days and not more than 60 days prior to the date
fixed for redemption. Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly
given, whether or not the shareholder receives such notice, and
failure duly to give such notice by mail, or any defect in such
notice, to any holder of shares of Non-Cumulative Preferred Stock
designated for redemption shall not affect the validity of the
proceedings for the redemption of any other shares of
Non-Cumulative Preferred Stock.
In case of redemption of a part only of the shares of
Non-Cumulative Preferred Stock at the time outstanding the
redemption may be either pro rata or by lot or by such other
means as the Board of Directors of the Association in its
discretion shall determine. The Board of Directors shall have
full power and authority, subject to the provisions herein
contained, to prescribe the terms and conditions upon which
shares of the NonCumulative Preferred Stock shall be redeemed
from time to time.
If notice of redemption shall have been duly given, and, if on or
before the redemption date specified therein, all funds necessary
for such redemption shall have been set aside by the Association,
separate and apart from its other funds, in trust for the pro
rata benefit of the holders of the shares called for redemption,
so as to be and continue to be available therefor, then,
notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, all
shares so called for redemption shall no longer be deemed
outstanding on and after such redemption date, and all rights
with respect to such shares shall forthwith on such redemption
date cease and terminate, except only the right of the holders
thereof to, receive the amount payable on redemption thereof,
without interest.
If such notice of redemption shall have been duly given or if the
Association shall have given to the bank or trust company
hereinafter referred to irrevocable authorization promptly to
give such notice, and, if on or before the redemption date
specified therein, the funds necessary for such redemption shall
have been deposited by the Association with such bank or trust
company in trust for the pro rata benefit of the holders of the
shares called for redemption, then, notwithstanding that any
certificate for shares so called for redemption shall not have
been surrendered for
5
<PAGE>
cancellation, from and after the time of such deposit, all shares
so called for redemption shall no longer be deemed to be
outstanding and all rights with respect to such shares shall
forthwith cease and terminate, except only the right of the
holders thereof to receive from such bank or trust company at any
time after the time of such deposit the funds so deposited,
without interest. The aforesaid bank or trust company shall be
organized and in good standing under the laws of the United
States of America or any state thereof, shall have capital,
surplus and undivided profits aggregating at least $50,000,000
ACCORDING TO its last published statement of condition, and shall
be identified in the notice of redemption. Any interest accrued
on such funds shall be paid to the Association from time to time.
In case fewer than all the shares of Non-Cumulative Preferred
Stock represented by a stock certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
Any funds so set aside or deposited, as the case may be, and
unclaimed at the end of the relevant escheat period under
applicable state law from such redemption date shall, to the
extent permitted by law, be released or repaid to the
Association, after which repayment the holders of the shares so
called for redemption shall look only to the Association for
payment thereof.
5. Liquidation.
-----------
(a) Liquidation Preference. In the event of any voluntary
liquidation, dissolution or winding up of the affairs of the
Association, the holders of Non-cumulative Preferred Stock shall
be entitled, before any distribution or payment is made to the
holders of any junior stock, to be paid in full an amount per
share equal to an amount equal to $1,000 plus an amount equal to
the amount of accrued and unpaid dividends per share from the
immediately preceding dividend payment date (but without any
accumulation for unpaid dividends for prior dividend periods on
the shares of Non-cumulative Preferred Stock) per share to such
distribution or payment date (the "liquidation amount").
In the event of any involuntary liquidation, dissolution or
winding up of the affairs of the Association, then, before any
distribution or payment shall be made to the holders of any
junior stock, the holders of Non-Cumulative Preferred Stock shall
be entitled to be paid in full an amount per share equal to the
liquidation amount.
6
<PAGE>
If such payment shall have been made in full to all holders of
shares of Non-Cumulative Preferred Stock, the remaining assets of
the Association shall be distributed among the holders of junior
stock, according to their respective rights and preferences and
in each case according to their respective numbers of shares.
(b) Insufficient Assets. In the event that, upon any such
voluntary or involuntary liquidation, dissolution or winding up,
the available assets of the Association are insufficient to pay
such liquidation amount on all outstanding shares of
Non-cumulative Preferred Stock, then the holders of
Non-Cumulative Preferred Stock shall share ratably in any
distribution of assets in proportion to the full amounts to which
they would otherwise be respectively entitled.
7
<PAGE>
(c) Interpretation. For the purposes of this paragraph 5, the
consolidation or merger of the Association with any other
corporation or association shall not be deemed to constitute a
liquidation, dissolution or winding up of the Association.
6. Preemptive Rights. The Non-Cumulative Preferred Stock is not
entitled to any preemptive, subscription, conversion or exchange
rights in respect of any securities of the Association.
7. Definitions. As used herein with respect to the Non-Cumulative
Preferred Stock, the following terms shall have the following
meanings:
(a) The term "junior stock" shall mean the Common Stock and any
other class or series of shares of the Association hereafter
authorized over which the Non-Cumulative Preferred Stock has
preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding
up of the Association.
(b) The term "accrued dividends", with respect to any share of
any class or series, shall mean an amount computed at the annual
dividend rate for the class or series of which the particular
share is a part, from, if such share is cumulative, the date on
which dividends on such share became cumulative to and including
the date to which such dividends are to be accrued, less the
aggregate amount of all dividends theretofore paid thereon and,
if such share is noncumulative, the relevant date designated to
and including the date to which such dividends are accrued, less
the aggregate amount of all dividends theretofore paid with
respect to such period.
(c) The term "Preferred Stock" shall mean all outstanding shares
of all series of preferred stock of the Association as defined in
this Article Fifth of the Articles of Association, as amended, of
the Association.
8. Restriction on Transfer. No shares of Non-Cumulative Preferred
Stock, or any interest therein, may be sold, pledged, transferred
or otherwise disposed of without the prior written consent of the
Association. The foregoing restriction shall be stated on any
certificate for any shares of Non-Cumulative Preferred Stock.
9. Additional Rights. The shares of Non-Cumulative Preferred Stock
shall not have any relative, participating, optional or other
special rights and powers other than as set forth herein.
SIXTH. The Board of Directors shall appoint one of its members
President of this Association, who shall be Chairman of the Board, unless
the Board appoints another director to be the Chairman. The Board of
Directors shall have the power to appoint one or more Vice Presidents; and
to appoint a cashier or such other officers and employees as may be
required to transact the business of this Association.
The Board of Directors shall have the power to define the duties of
the officers and employees of the Association, to fix the salaries to be
paid to them; to dismiss them, to require bonds from them and to fix the
penalty thereof; to regulate the manner in which any increase of the
capital of the Association shall be made; to manage and administer the
business and affairs of the Association; to make all By-Laws that it may be
lawful for them to make; and generally to do and perform all acts that it
may be legal for a Board of Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of
Charlotte, North Carolina, without the approval of the shareholders but
subject to the approval of the Comptroller of the Currency; and shall have
the power to establish or change the location of any branch or branches of
the Association to any other location, without the approval of the
shareholders but subject to the approval of the Comptroller of the
Currency.
EIGHTH. The corporate existence of this Association shall continue
until terminated in accordance with the laws of the United States.
8
<PAGE>
NINTH. The Board of Directors of this Association, or any three or
more shareholders owning, in the aggregate, not less than 10 percent of the
stock of this Association, may call a special meeting of shareholders at
any time. Unless otherwise provided by the laws of the United States, a
notice of the time, place, and purpose of every annual and special meeting
of the shareholders shall be given by first-class mail, postage prepaid,
mailed at least ten days prior to the date of such meeting to each
shareholder of record at his address as shown upon the books of this
Association.
TENTH. Each director and executive officer of this Association shall
be indemnified by the association against liability in any proceeding
(including without limitation a proceeding brought by or on behalf of the
Association itself) arising out of his status as such or his activities in
either of the foregoing capacities, except for any liability incurred on
account of activities which were at the time taken known or believed by
such person to be clearly in conflict with the best interests of the
Association. Liabilities incurred by a director or executive officer of the
Association in defending a proceeding shall be paid by the Association in
advance of the final disposition of such proceeding upon receipt of an
undertaking by the director or executive officer to repay such amount if it
shall be determined, as provided in the last paragraph of this Article
Tenth, that he is not entitled to be indemnified by the Association against
such liabilities.
The indemnity against liability in the preceding paragraph of this
Article Tenth, including liabilities incurred in defending a proceeding,
shall be automatic and self-operative.
Any director, officer or employee of this Association who serves at
the request of the Association as a director, officer, employee or agent of
a charitable, notfor-profit, religious, educational or hospital
corporation, partnership, joint venture, trust or other enterprise, or a
trade association, or as a trustee or administrator under an employee
benefit plan, or who serves at the request of the Association as a
director, officer or employee of a business corporation in connection with
the administration of an estate or trust by the Association, shall have the
right to be indemnified by the Association, subject to the provisions set
forth in the following paragraph of this Article Tenth, against liabilities
in any manner arising out of or attributable to such status or activities
in any such capacity, except for any liability incurred on account of
activities which were at the time taken known or believed by such person to
be clearly in conflict with the best interests of the Association, or of
the corporation, partnership, joint venture, trust, enterprise, Association
or plan being served by such person.
9
<PAGE>
In the case of all persons except the directors and executive officers
of the Association, the determination of whether a person is entitled to
indemnification under the preceding paragraph of this Article Tenth shall
be made by and in the sole discretion of the Chief Executive Officer of the
Association. In the case of the directors and executive officers of the
Association, the indemnity against liability in the preceding paragraph of
this Article Tenth shall be automatic and self-operative.
For purposes of this Article Tenth of these Articles of Association
only, the following terms shall have the meanings indicated:
(a) "Association" means First Union National Bank and its direct and
indirect wholly-owned subsidiaries.
(b) "Director" means an individual who is or was a director of the
Association.
(c) "Executive officer" means an officer of the Association who by
resolution of the Board of Directors of the Association has been determined
to be an executive officer of the Association for purposes of Regulation 0
of the Federal Reserve Board.
(d) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan), or reasonable expenses, including counsel fees and expenses,
incurred with respect to a proceeding.
(e) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(f) "Proceeding" means any threatened, pending, or completed claim,
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
The Association shall have no obligation to indemnify any person for
an amount paid in settlement of a proceeding unless the Association
consents in writing to such settlement.
The right to indemnification herein provided for shall apply to
persons who are directors, officers, or employees of banks or other
entities that are hereafter merged or otherwise combined with the
Association only after the effective date
10
<PAGE>
of such merger or other combination and only as to their status and
activities after such date.
The right to indemnification herein provided for shall inure to the
benefit of the heirs and legal representatives of any person entitled to
such right.
No revocation of, change in, or adoption of any resolution or
provision in the Articles of Association or By-laws of the Association
inconsistent with, this Article Tenth shall adversely affect the rights of
any director, officer, or employee of the Association with respect to (i)
any proceeding commenced or threatened prior to such revocation, change, or
adoption, or (ii) any proceeding arising out of any act or omission
occurring prior to such revocation, change, or adoption, in either case,
without the written consent of such director, officer, or employee.
The rights hereunder shall be in addition to and not exclusive of any
other rights to which a director, officer, or employee of the Association
may be entitled under any statute, agreement, insurance policy, or
otherwise.
The Association shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, or
employee of the Association, or is or was serving at the request of the
Association as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, trade association, employee
benefit plan, or other enterprise, against any liability asserted against
such director, officer, or employee in any such capacity, or arising out of
their status as such, whether or not the Association would have the power
to indemnify such director, officer, or employee against such liability,
excluding insurance coverage for a formal order assessing civil money
penalties against an Association director or employee.
Notwithstanding anything to the contrary provided herein, no person
shall have a right to indemnification with respect to any liability (i)
incurred in an administrative proceeding or action instituted by an
appropriate bank regulatory agency which proceeding or action results in a
final order assessing civil money penalties or requiring affirmative action
by an individual or individuals in the form of payments to the Association,
(ii) to the extent such person is entitled to receive payment therefor
under any insurance policy or from any corporation, partnership, joint
venture, trust, trade association, employee benefit plan, or other
enterprise other than the Association, or (iii) to the extent that a court
of competent jurisdiction determines that such indemnification is void or
prohibited under state or federal law.
11
<PAGE>
ELEVENTH. These Articles of Association may be amended at any regular
or special meeting of the shareholders by the affirmative vote of the
holders of a majority of the stock of this Association, unless the vote of
holders of a greater amount of stock is required by law, and in that case,
by the vote of the holders of such greater amount.
12
<PAGE>
BY-LAWS OF
FIRST UNION NATIONAL BANK
Charter No. 1
Effective May 18, 1998
<PAGE>
BY-LAWS OF
FIRST UNION NATIONAL BANK
ARTICLE I
Meetings of Shareholders
Section 1 . 1 Annual Megttg. The annual meeting of the shareholders
for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held on the third
Tuesday of April in each year, commencing with the year 1998, except that
the Board of Directors may, from time to time and upon passage of a
resolution specifically setting forth its reasons, set such other date for
such meeting during the month of April as the Board of Directors may deem
necessary or appropriate; provided, however, that if an annual meeting
would otherwise fall on a legal holiday, then such annual meeting shall be
held on the second business day following such legal holiday. The holders
of a majority of the outstanding shares entitled to vote which are
represented at any meeting of the shareholders may choose persons to act as
Chairman and as Secretary of the meeting.
Section 1.2 Special Meetings. Except as otherwise specifically
provided by statute, special meetings of the shareholders may be called for
any purpose at any time by the Board of Directors or by any three or more
shareholders owning, in the aggregate, not less than ten percent of the
stock of the Association. Every such special meeting, unless otherwise
provided by law, shall be called by mailing, postage prepaid, not less than
ten days prior to the date fixed for such meeting, to each shareholder at
his address appearing on the books of the Association, a notice stating the
purpose of the meeting.
Section 1.3 Nominations for Directors. Nominations for election to the
Board of Directors may be made by the Board of Directors or by any
stockholder of any outstanding class of capital stock of the bank entitled
to vote for the election of directors. Nominations, other than those made
by or on behalf of the existing management of the bank, shall be made in
writing and shall be delivered or mailed to the President of the Bank and
to the Comptroller of the Currency, Washington, D. C., not less than 14
days nor more than 50 days prior to any meeting of stockholders called for
the election of directors, provided however, that if less than 21 days'
notice of such meeting is given to shareholders, such
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nomination shall be mailed or delivered to the President of the Bank and to
the Comptroller of the Currency not later than the close of business on the
seventh day following the day on which the notice of meeting was mailed.
Such notification shall contain the following information to the extent
known to the notifying shareholder: (a) the name and address of each
proposed nominee; (b) the principal occupation of each proposed nominee;
(c) the total number of shares of capital stock of the bank that will be
voted for each proposed nominee; (d) the name and residence address of the
notifying shareholder; and (e) the number of shares of capital stock of the
bank owned by the notifying shareholder. Nominations not made in accordance
herewith may, in his discretion, be disregarded by the chairman of the
meeting, and upon his instructions, the vote tellers may disregard all
votes cast for each such nominee.
Section 1.4 Judges of Election. The Board may at any time appoint from
among the shareholders three or more persons to serve as Judges of Election
at any meeting of shareholders; to act as judges and tellers with respect
to all votes by ballot at such meeting and to file with the Secretary of
the meeting a Certificate under their hands, certifying the result thereof.
Section 1.5 Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing, but no officer or
employee of this Association shall act as proxy. Proxies shall be valid
only for one meeting, to be specified therein, and any adjournments of such
meeting. Proxies shall be dated and shall be filed with the records of the
meeting.
Section 1.6 Quorum. A majority of the outstanding capital stock,
represented 'in person or by proxy, shall constitute a quorum at any
meeting of shareholders, unless otherwise provided by law; but less than a
quorum may adjourn any meeting, from time to time, and the meeting may be
held, as adjourned, without further notice. A majority of the votes cast
shall decide every question or matter submitted to the shareholders at any
meeting, unless otherwise provided by law or by the Articles of
Association.
ARTICLE II
Directors
Section 2.1 Board of Directors. The Board of Directors (hereinafter
referred to as the "Board"), shall have power to manage and administer the
business and affairs of the Association. Except as expressly limited by
law, all corporate powers of the Association shall be vested in and may be
exercised by said Board.
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Section 2.2 Number. The Board shall consist of not less than five nor
more than twenty-five directors, the exact number within such minimum and
maximum limits to be fixed and determined from time to time by resolution
of a majority of the full Board or by resolution of the shareholders at any
meeting thereof; provided, however, that a majority of the full Board of
Directors may not increase the number of directors to a number which, (1)
exceeds by more than two the number of directors last elected by
shareholders where such number was fifteen or less, and (2) to a number
which exceeds by more than four the number of directors last elected by
shareholders where such number was sixteen or more, but 'in no event shall
the number of directors exceed twenty-five.
Section 2.3. Organization Meeting. The Secretary of the meeting upon
receiving the certificate of the judges, of the result of any election,
shall notify the directors-elect of their election and of the time at which
they are required to meet at the Main Office of the Association for the
purpose of organizing the new Board and electing and appointing officers of
the Association for the succeeding year. Such meeting shall be held as soon
thereafter as practicable. If, at the time fixed for such meeting, there
shall not be a quorum present, the directors present may adjourn the
meeting from time to time, until a quorum is obtained.
Section 2.4 Regular Meetings. Regular meetings of the Board of
Directors shall be held at such place and time as may be designated by
resolution of the Board of Directors. Upon adoption of such resolution, no
further notice of such meeting dates or the places or times thereof shall
be required. Upon the failure of the Board of Directors to adopt such a
resolution, regular meetings of the Board of Directors shall be held,
without notice, on the third Tuesday in February, April, June, August,
October and December, commencing with the year 1997, at the main office or
at such other place and time as may be designated by the Board of
Directors. When any regular meeting of the Board would otherwise fall on a
holiday, the meeting shall be held on the next business day unless the
Board shall designate some other day.
Section 2.5 Special Meetings. Special meetings of the Board of
Directors may be called by the President of the Association, or at the
request of three (3) or more directors. Each member of the Board of
Directors shall be given notice stating the time and place, by telegram,
letter, or in person, of each such special meeting.
Section 2.6 Quorum. A majority of the directors shall constitute a
quorum at any meeting, except when otherwise provided by law; but a less
number may adjourn any meeting, from time to time, and the meeting may be
held, as adjourned, without further notice.
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Section 2.7 Vacancies. When any vacancy occurs among the directors,
the remaining members of the Board, in accordance with the laws of the
United States, may appoint a director to fill such vacancy at any regular
meeting of the Board, or at a special meeting called for that purpose.
Section 2.8 Advisory Boards. The Board of Directors may appoint
Advisory Boards for each of the states in which the Association conducts
operations. Each such Advisory Board shall consist of as many persons as
the Board of Directors may determine. The duties of each Advisory Board
shall be to consult and advise with the Board of Directors and senior
officers of the Association in such state with regard to the best interests
of the Association and to perform such other duties as the Board of
Directors may lawfully delegate. The senior officer in such state, or such
officers as directed by such senior officer, may appoint advisory boards
for geographic regions within such state and may consult with the State
Advisory Boards prior to such appointments.
ARTICLE III
Committees of the Board
Section 3.1 The Board of Directors, by resolution adopted by a
majority of the number of directors fixed by these By-Laws, may designate
two or more directors to constitute an Executive Committee and other
committees, each of which, to the extent authorized by law and provided in
such resolution, shall have and may exercise all of the authority of the
Board of Directors and the management of the Association. The designation
of any committee and the delegation thereto of authority shall not operate
to relieve the Board of Directors, or any member thereof, of any
responsibility or liability imposed upon it or any member of the Board of
Directors by law. The Board of Directors reserves to itself alone the power
to act on (1) dissolution, merger or consolidation, or disposition of
substantially all corporate property, (2) designation of committees or
filling vacancies on the Board of Directors or on a committee of the Board
(except as hereinafter provided), (3) adoption, amendment or repeal of
By-laws, (4) amendment or repeal of any resolution of the Board which by
its terms is not so amendable or repealable, and (5) declaration of
dividends, issuance of stock, or recommendations to stockholders of any
action requiring stockholder approval.
The Board of Directors or the Chairman of the Board of Directors of
the Association may change the membership of any committee at any time,
fill vacancies therein, discharge any committee or member thereof either
with or without cause at any time, and change at any time the authority and
responsibility of any such committee.
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A majority of the members of any committee of the Board of Directors
may fix such committee's rules of procedure. All action by any committee
shall be reported to the Board of Directors at a meeting succeeding such
action, except such actions as the Board may not require to be reported to
it in the resolution creating any such committee. Any action by any
committee shall be subject to revision, alteration, and approval by the
Board of Directors, except to the extent otherwise provided in the
resolution creating such committee; provided, however, that no rights or
acts of third parties shall be affected by any such revision or alteration.
ARTICLE IV
Officers and Employees
Section 4.1 Officers. The officers of the Association may be a
Chairman of the Board, a Vice Chairman of the Board, one or more Chairmen
or Vice Chairmen (who shall not be required to be directors of the
Association), a President, one or more Vice Presidents, a Secretary, a
Cashier or Treasurer, and such other officers, including officers holding
similar or equivalent titles to the above in regions, divisions or
functional units of the Association, as may be appointed by the Board of
Directors. The Chairman of the Board and the President shall be members of
the Board of Directors. Any two or more offices may be held by one person,
but no officer shall sign or execute any document in more than one
capacity.
Section 4.2 Election, Term of Office, and Qualification. Each officer
shall be chosen by the Board of Directors and shall hold office until the
annual meeting of the Board of Directors held next after his election or
until his successor shall have been duly chosen and qualified, or until his
death, or until he shall resign, or shall have been disqualified, or shall
have been removed from office.
Section 4.2(a) Officers Actinq as Assistant Secretary. Notwithstanding
Section 1 of these By-laws, any Senior Vice President, Vice President, or
Assistant Vice President shall have, by virtue of his office, and by
authority of the By-laws, the authority from time to time to act as an
Assistant Secretary of the Bank, and to such extent, said officers are
appointed to the office of Assistant Secretary.
Section 4.3 Chief Executive Officer. The Board of Directors shall
designate one of its members to be the President of this Association, and
the officer so designated shall be an ex officlo member of all committees
of the Association except the Examining Committee, and its Chief Executive
Officer unless some other officer is so designated by the Board of
Directors.
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Section 4.4 Duties of Officers. The duties of all officers shall be
prescribed by the Board of Directors. Nevertheless, the Board of Directors
may delegate to the Chief Executive Officer the authority to prescribe the
duties of other officers of the corporation not inconsistent with law, the
charter, and these By-laws, and to appoint other employees, prescribe their
duties, and to dismiss them. Notwithstanding such delegation of authority,
any officer or employee also may be dismissed at any time by the Board of
Directors.
Section 4.5 Other Employees. The Board of Directors may appoint from
time to time such tellers, vault custodians, bookkeepers, and other clerks,
agents, and employees as it may deem advisable for the prompt and orderly
transaction of the business of the Association, define their duties, fix
the salary to be paid them, and dismiss them. Subject to the authority of
the Board of Directors, the Chief Executive Officer or any other officer of
the Association authorized by him, may appoint and dismiss all such
tellers, vault custodians, bookkeepers and other clerks, agents, and
employees, prescribe their duties and the conditions of their employment,
and from time to time fix their compensation.
Section 4.6 Removal and Resignation. Any officer or employee of the
Association may be removed either with or without cause by the Board of
Directors. Any employee other than an officer elected by the Board of
Directors may be dismissed in accordance with the provisions of the
preceding Section 4.5. Any officer may resign at any time by giving written
notice to the Board of Directors or to the Chief Executive Officer of the
Association. Any such resignation shall become effective upon its being
accepted by the Board of Directors, or the Chief Executive Officer.
ARTICLE V
Fiduciary Powers
Section 5.1 Capital Management Group. There shall be an area of this
Association known as the Capital Management Group which shall be
responsible for the exercise of the fiduciary powers of this Association.
The Capital Management Group shall consist of four service areas: Fiduciary
Services, Retail Services, Investments and Marketing. The Fiduciary
Services unit shall consist of personal trust, employee benefits, corporate
trust and operations. The General Office for the Fiduciary Services unit
shall be located in Charlotte, N.C., with City Trust Offices located in
such cities within the State of North Carolina as designated by the Board
of Directors.
Section 5.2 Trust Officers. There shall be a General Trust Officer of
this Association whose duties shall be to manage, supervise and direct all
the activities
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of the Capital Management Group. Further, there shall be one or more Senior
Trust Officers designated to assist the General Trust Officer in the
performance of his duties. They shall do or cause to be done all things
necessary or proper in carrying out the business of the Capital Management
Group in accordance with provisions of applicable law and regulation.
Section 5.3 Capital Management/General Trust Committee. There shall be
a Capital Management/General Trust Committee composed of not less than four
(4) members of the Board of Directors or officers of this Association who
shall be appointed annually or from time to time by the Board of Directors
of the Association. The General Trust Officer shall serve as an ex-officio
member of the Committee. Each member shall serve until his successor is
appointed. The Board of Directors or the Chairman of the BOARD may change
the membership of the Capital Management/General Trust Committee at any
time, fill vacancies therein, or discharge any member thereof with or
without cause at any time. The Committee shall counsel and advise on all
matters relating to the business or affairs of the Capital Management Group
and shall adopt overall policies for the conduct of the business of the
Capital Management Group including but not limited to: general
administration, investment policies, new business development, and review
for approval of major assignments of functional responsibilities. The
Committee shall meet at least quarterly or as called for by its Chairman or
any three (3) members of the Committee. A quorum shall consist of three (3)
members. In carrying out its responsibilities, the Capital
Management/General Trust Committee shall review the actions of all
officers, employees and committees utilized by this Association in
connection with the activities of the Capital Management Group and may
assign the administration and performance of any fiduciary powers or duties
to any of such officers or employees or to the Investment Policy Committee,
Personal Trust Administration Committee, Account Review Committee,
Corporate and Institutional Accounts Committee, or any other committees it
shall designate. One of the methods to be used in the review process will
be the thorough scrutiny of the Report of Examination by the Office of the
Comptroller of the Currency and the reports of the Audit Division of First
Union Corporation, as they relate to the activities of the Capital
Management Group. These reviews shall be in addition to reviews of such
reports by the Audit Committee of the Board of Directors. The Chairman of
the Capital Management/ General Trust Committee shall be appointed by the
Chairman of the Board of Directors. He shall cause to be recorded in
appropriate minutes all actions taken by the Committee. The minutes shall
be signed by its Secretary and approved by its Chairman. Further, the
Committee shall summarize all actions taken by it and shall submit a report
of its proceedings to the Board of Directors at its next regularly
scheduled meeting following a meeting of the Capital Management/General
Trust Committee. As required by Section 9.7 of Regulation
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9 of the Comptroller of the Currency, the Board of Directors retains
responsibility for the proper exercise of the fiduciary powers of this
Association.
The Fiduciary Services unit of the Capital Management Group will
maintain a list of securities approved for investment in fiduciary accounts
and will from time to time provide the Capital Management/General Trust
Committee with current information relative to such list and also with
respect to transactions in other securities not on such list. It is the
policy of this Association that members of the Capital Management/General
Trust Committee should not buy, sell or trade in securities which are on
such approved list or in any other securities in which the Fiduciary
Services unit has taken, or intends to take, a position in fiduciary
accounts in any circumstances in which any such transaction could be viewed
as a possible conflict of interest or could constitute a violation of
applicable law or regulation. Accordingly, if any such securities are owned
by any member of the Capital Management/General Trust Committee at the time
of appointment to such Committee, the Capital Management Group shall be
promptly so informed in writing. If any member of the Capital
Management/General Trust Committee intends to buy, sell, or trade in any
such securities while serving as a member of the Committee, he should first
notify the Capital Management Group in order to make certain that any
proposed transaction will not constitute a violation of this policy or of
applicable law or regulation.
Section 5.4 Investment Policy Committee. There shall be an Investment
Policy Committee composed of not less than seven (7) officers and/or
employees of this Association who shall be appointed annually or from time
to time by the Board of Directors. Each member shall serve until his
successor is appointed. Meetings shall be called by the Chairman or any two
(2) members of the Committee. A quorum shall consist of five (5) members.
The Investment Policy Committee shall exercise such fiduciary powers and
perform such duties as may be assigned to it by the Capital
Management/General Trust Committee. All actions taken by the Investment
Policy Committee shall be recorded in appropriate minutes, signed by the
Secretary thereof, approved by its Chairman and submitted to the Capital
Management/General Trust Committee at its next ensuing regular meeting for
its review and approval.
Section 5.5 Personal Trust Administration Committee. There shall be a
Personal Trust Administration Committee composed of not less than five (5)
officers, who shall be appointed annually or from time to time by the Board
of Directors. Each member shall serve until his successor is appointed.
Meetings shall be called by the Chairman or any three (3) members of the
Committee. A quorum shall consist of three (3) members. The Personal Trust
Administration Committee shall exercise such fiduciary powers and perform
such duties as may be assigned to it by the Capital Management/General
Trust Committee. All action
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taken by the Personal Trust Administration Committee shall be recorded in
appropriate minutes signed by the Secretary thereof, approved by its
Chairman, and submitted to the Capital Management/General Trust Committee
at its next ensuing regular meeting for its review and approval.
Section 5.6 Account Review Committee. There shall be an Account Review
Committee composed of not less than four (4) officers and/or employees of
this Association, who shall be appointed annually or from time to time by
the Board of Directors. Each member shall serve until his successor 'is
appointed. Meetings shall be called by the Chairman or any two (2) members
of the Committee. A quorum shall consist of three (3) members. The Account
Review Committee shall exercise such fiduciary powers and perform such
duties as may be assigned to it by the Capital Management/General Trust
Committee. All actions taken by the Account Review Committee shall be
recorded in appropriate minutes, signed by the Secretary thereof, approved
by its Chairman and submitted to the Capital Management/ General Trust
Committee at its next ensuing regular meeting for its review and approval.
Section 5.7 Corporate and Institutional Accounts Committee. There
shall be a Corporate and Institutional Accounts Committee composed of not
less than five (5) officers and/or employees of this Association, who shall
be appointed annually, or from time to time, by the Capital
Management/General Trust Committee and approved by the Board of Directors.
Meetings may be called by the Chairman or any two (2) members of the
Committee. A quorum shall consist of three (3) members. The Corporate and
Institutional Accounts Committee shall exercise such fiduciary powers and
duties as may be assigned to it by the General Trust Committee. All actions
taken by the Corporate and Institutional Accounts Committee shall be
recorded in APPROPRIATE minutes, signed by the Secretary thereof, approved
by its Chairman and made available to the General Trust Committee at 'its
next ensuing regular meeting for its review and approval.
ARTICLE VI
Stock and Stock Certificates
Section 6.1 Transfers. Shares of stock shall be transferable on the
books of the Association, and a transfer book shall be kept in which all
transfers of stock shall be recorded. Every person becoming a shareholder
by such transfer shall, in proportion to his shares, succeed to all rights
and liabilities of the prior holder of such shares.
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Section 6.2 Stock Certificates. Certificates of stock shall bear the
signature of the Chairman, the Vice Chairman, the President, or a Vice
President (which may be engraved, printed, or impressed), and shall be
signed manually or by facsimile process by the Secretary, Assistant
Secretary, Cashier, Assistant Cashier, or any other officer appointed by
the Board of Directors for that purpose, to be known as an Authorized
Officer, and the seal of the Association shall be engraved thereon. Each
certificate shall recite on its face that the stock represented thereby is
transferable only upon the books of the Association properly endorsed.
ARTICLE VII
Corporate Seal
Section 7.1 The President, the Cashier, the Secretary, or any
Assistant Cashier, or Assistant Secretary, or other officer thereunto
designated by the Board of Directors shall have authority to affix the
corporate seal to any document requiring such seal, and to attest the same.
Such seal shall be substantially in the following form.
ARTICLE VIII
Miscellaneous Provisions
Section 8.1 Fiscal Year. The fiscal year of the Association shall be
the calendar year.
Section 8.2 Execution of Instruments. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations,
receipts, discharges, releases, satisfactions, settlements, petitions,
notices, applications, schedules, accounts, affidavits, bonds,
undertakings, proxies, and other instruments or documents may be signed,
executed, acknowledged, verified, delivered or accepted in behalf of the
Association by the Chairman of the Board, the Vice Chairman of the Board,
any Chairman or Vice Chairman, the President, any Vice President or
Assistant Vice President, the Secretary or any Assistant Secretary, the
Cashier or Treasurer or any Assistant Cashier or Assistant Treasurer, or
any officer holding similar or equivalent titles to the above in any
regions, divisions or functional units of the Association, or, if in
connection with the exercise of fiduciary powers of the Association, by any
of said officers or by any Trust Officer or Assistant Trust Officer (or
equivalent titles); provided, however, that where required, any such
instrument shall be attested by one of
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said officers other than the officer executing such instrument. Any such
instruments may also be executed, acknowledged, verified, delivered or
accepted in behalf of the Association in such other manner and by such
other officers as the Board of Directors may from time to time direct. The
provisions of this Section 8.2 are supplementary to any other provision of
these By-laws.
Section 8.3 Records. The Articles of Association, the By-laws, and the
proceedings of all meetings of the shareholders, the Board of Directors,
standing committees of the Board, shall be recorded in appropriate minute
books provided for the purpose. The minutes of each meeting shall be signed
by the Secretary, Cashier, or other officer appointed to act as Secretary
of the meeting.
ARTICLE IX
By-laws
Section 9.1 Inspection. A copy of the By-laws, with all amendments
thereto, shall at all times be kept in a convenient place at the Head
Office of the Association, and shall be open for inspection to all
shareholders, during banking hours.
Section 9.2 Amendments. The By-laws may be amended, altered or
repealed, at any regular or special meeting of the Board of Directors, by a
vote of a majority of the whole number of Directors.
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Exhibit A
First Union National Bank
Article X
Emergency By-laws
In the event of an emergency declared by the President of the United
States or the person performing his functions, the officers and employees
of this Association will continue to conduct the affairs of the Association
under such guidance from the directors or the Executive Committee as may be
available except as to matters which by statute require specific approval
of the Board of Directors and subject to conformance with any applicable
governmental directives during the emergency.
OFFICERS PRO TEMPORE AND DISASTER
Section 1. The surviving members of the Board of Directors or the
Executive Committee shall have the power, in the absence or disability of
any officer, or upon the refusal of any officer to act, to delegate and
prescribe such officer's powers and duties to any other officer, or to any
director, for the time being.
Section 2. In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of this
Association by its directors and officers as contemplated by these By-laws,
any two or more available members of the then incumbent Executive Committee
shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Association in accordance
with the provisions of Article 11 of these By-laws; and in addition, such
Committee shall be empowered to exercise all of the powers reserved to the
General Trust Committee under Section 5.3 of Article V hereof. In the event
of the unavailability, at such time, of a minimum of two members of the
then incumbent Executive Committee, any three available directors shall
constitute the Executive Committee for the full conduct and management of
the affairs and business of the Association in accordance with the
foregoing provisions of this section. This By-law shall be subject to
implementation by resolutions of the Board of Directors passed from time to
time for that purpose, and any provisions of these By-laws (other than this
section) and any resolutions which are contrary to the provisions of this
section or to the provisions of any such implementary resolutions shall be
suspended until it shall be
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determined by an interim Executive Committee acting under this section that
it shall be to the advantage of this Association to resume the conduct and
management of its affairs and business under all of the other provisions of
these By-laws.
Officer Succession
BE IT RESOLVED, that if consequent upon war or warlike damage or
disaster, the Chief Executive Officer of this Association cannot be located
by the then acting Head Officer or is unable to assume or to continue
normal executive duties, then the authority and duties of the Chief
Executive Officer shall, without further action of the Board of Directors,
be automatically assumed by one of the following persons in the order
designated:
Chairman
President
Division Head/Area Administrator - Within this officer class, officers
shall take seniority on the basis of length of service in such office
or, in the event of equality, length of service as an officer of the
Association.
Any one of the above persons who in accordance with this resolution
assumes the authority and duties of the Chief Executive Officer shall
continue to serve until he resigns or until five-sixths of the other
officers who are attached to the then acting Head Office decide in writing
he is unable to perform said duties or until the elected Chief Executive
Officer of this Association, or a person higher on the above list, shall
become available to perform the duties of Chief Executive Officer of the
Association.
BE IT FURTHER RESOLVED, that anyone dealing with this Association may
accept a certification by any three officers that a specified individual is
acting as Chief Executive Officer in accordance with this resolution; and
that anyone accepting such certification may continue to consider it in
force until notified in writing of a change, said notice of change to carry
the signatures of three officers of the Association.
Alternate Locations
The offices of the Association at which its business shall be
conducted shall be the main office thereof in each city which is designated
as a City Office (and branches, if any), and any other legally authorized
location which may be leased or acquired by this Association to carry on
its business. During an emergency resulting in any authorized place of
business of this Association being unable to function, the business
ordinarily conducted at such location shall be relocated
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elsewhere in suitable quarters, in addition to or in lieu of the locations
heretofore mentioned, as may be designated by the Board of Directors or by
the Executive Committee or by such persons as are then, in accordance with
resolutions adopted from time to time by the Board of Directors dealing
with the exercise of authority in the time of such emergency, conducting
the affairs of this Association. Any temporarily relocated place of
business of this Association shall be returned to its legally authorized
location as soon as practicable and such temporary place of business shall
then be discontinued.
Acting Head Offices
BE IT RESOLVED, that in case of and provided because of war or warlike
damage or disaster, the General Office of this Association, located in
Charlotte, North Carolina, is unable temporarily to continue its functions,
the Raleigh office, located in Raleigh, North Carolina, shall automatically
and without further action of this Board of Directors, become the "Acting
Head Office of this Association";
BE IT FURTHER RESOLVED, that if by reason of said war or warlike
damage or disaster, both the General Office of this Association and the
said Raleigh Office of this Association are unable to carry on their
functions, then and in such case, the Asheville Office of this Association,
located in Asheville, North Carolina, shall, without further action of this
Board of Directors, become the "Acting Head Office of this Association";
and if neither the Raleigh Office nor the Asheville Office can carry on
their functions, then the Greensboro Office of this Association, located in
Greensboro, North Carolina, shall, without further action of this Board of
Directors, become the "Acting Head Office of this Association"; and if
neither the Raleigh Office, the Asheville Office, nor the Greensboro Office
can carry on their functions, then the Lumberton Office of this
Association, located in Lumberton, North Carolina, shall, without further
action of this Board of Directors, become the "Acting Head Office of this
Association". The Head Office shall resume its functions at its legally
authorized location as soon as practicable.
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Legal Title of Bank: First Union National Bank Call Date: 09/30/99 FFIEC 031
Address: Two First Union Center Page RC-1
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 33869
-----
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR SEPTEMBER 30, 1999
All schedules are to be reported in thousands of dollars.
Unless otherwise indicated, report the amount outstanding
as of the last business day of the quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400
Dollar Amount in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS ////////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): ////////////////////
a. Noninterest-bearing balances and currency and coin (1)...................................... 0081 8,946,000 1.a.
b. Interest-bearing balances (2)............................................................... 0071 266,000 1.b.
2. Securities: ////////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A).................................. 1754 1,644,000 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)................................ 1773 47,356,000 2.b.
3. Federal funds sold and securities purchased under agreements to resell......................... 1350 2,856,000 3.
4. Loans and lease financing receivables ////////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 132,839,000 //////////////////// 4.a.
b. LESS: Allowance for loan and lease losses RCFD 3123 1,743,000//////// 4.b.
c. LESS: Allocated transfer risk reserve RCFD 3128 0 /////////////
d. Loans and leases, net of unearned income, ///////////////
allowance, and reserve (item 4.a minus 4.b and 4.c)......................................... 2125 131,096,000 4.d.
5. Trading assets (from Schedule RC-D............................................................. 3545 8,333,000 5.
6. Premises and fixed assets (including capitalized leases)....................................... 2145 3,070,000 6.
7. Other real estate owned (from Schedule RC-M)................................................... 2150 134,000 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M)....... 2130 262,000 8.
9. Customers' liability to this bank on acceptances outstanding................................... 2155 807,000 9.
10. Intangible assets (from Schedule RC-M)......................................................... 2143 5,115,000 10.
11. Other assets (from Schedule RC-F).............................................................. 2160 10,789,000 11.
12. Total assets (sum of items 1 through 11)....................................................... 2170 220,674,000 12.
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<FN>
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
</FN>
</TABLE>
<PAGE>
Legal Title of Bank: First Union National Bank Call Date: 09/30/99 FFIEC 031
Address: Two First Union Center Page RC-2
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 33869
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<TABLE>
<CAPTION>
Dollar Amount in Thousands Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES //////////////////////
13. Deposits: //////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E //////////////////////
part I)................................................................................... RCON 2200 129,621,000 13.a.
(1) Noninterest-bearing (1) RCON 6631..... 21,341,000 ////////////////////// 13.a.(1)
(2) Interest-bearing...............................................RCON 6636 108,280,000 ////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, //////////////////////
part II).................................................................................. RCFN 2200 9,838,000 13.b.
(1) Noninterest-bearing............................................RCFN 6631 466,000 ////////////////////// 13.b.(1)
(2) Interest-bearing...............................................RCFN 6636 9,372,000 ////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase................... RCFD 2800 23,796,000 14.
15. a. Demand notes issued to the U.S. Treasury................................................. RCON 2840 782,000 15.a.
b. Trading liabilities (from Schedule RC-D)................................................. RCFD 3548 4,984,000 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under //////////////////////
capitalized leases):......................................................................... //////////////////////
a. With a remaining maturity of one year or less........................................... RCFD 2332 14,643,000 16.a.
b. With a remaining maturity of more than one year through three years..................... RCFD A547 5,639,000 16.b.
c. With a remaining maturity of more than three years...................................... RCFD A548 2,872,000 16.c.
17. Not applicable............................................................................... //////////////////////
18. Bank's liability on acceptances executed and outstanding..................................... RCFD 2920 807,000 18.
19. Subordinated notes and debentures (2)........................................................ RCFD 3200 4,269,000 19.
20. Other liabilities (from Schedule RC-G)....................................................... RCFD 2930 6,515,000 20.
21. Total liabilities (sum of items 13 through 20)............................................... RCFD 2948 203,766,000 21.
22. Not applicable............................................................................... //////////////////////
EQUITY CAPITAL //////////////////////
23. Perpetual preferred stock and related surplus................................................ RCFD 3838 161,000 23.
24. Common stock................................................................................. RCFD 3230 455,000 24.
25. Surplus (exclude all surplus related to preferred stock)..................................... RCFD 3839 13,306,000 25.
26. a. Undivided profits and capital reserves................................................... RCFD 3632 3,553,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities................... RCFD 8434 (562,000)26.b.
c. Accumulated net gains (losses) on cash flow hedges....................................... RCFD 4336 0 26 c.
27. Cumulative foreign currency translation adjustments.......................................... RCFD 3284 (5,000)27.
28. Total equity capital (sum of items 23 through 27)............................................ RCFD 3210 16,908,000 28.
29. Total liabilities and equity capital (sum of items 21 and 28)................................ RCFD 3300 220,674,000 29.
<CAPTION>
<S> <C>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1998............................................................ RCFD 6724 N/A M.1.
1 =Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 =Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 =Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting firm
(may be required by state chartering authority)
4 =Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 =Review of the bank's financial statements by external auditors
6 =Compilation of the bank's financial statements by external auditors
7 =Other audit procedures (excluding tax preparation work)
8 =No external audit work
- ----------
<FN>
(1) Includes total demand deposits and noninterest-bearing time and savings
deposit.
(2) Includes limited-life preferred stock and related surplus.
</FN>
</TABLE>
